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Free E File

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Free e file Publication 504 - Main Content Table of Contents Filing StatusUnmarried persons. Free e file Married persons. Free e file Same-sex marriage. Free e file Exception. Free e file Married Filing Jointly Married Filing Separately Head of Household ExemptionsPersonal Exemptions Exemptions for Dependents Phaseout of Exemptions AlimonyInvalid decree. Free e file Amended instrument. Free e file General Rules Instruments Executed After 1984 Instruments Executed Before 1985 Qualified Domestic Relations OrderRollovers. Free e file Individual Retirement Arrangements Property SettlementsTransfer Between Spouses Gift Tax on Property Settlements Sale of Jointly-Owned Property Costs of Getting a Divorce Tax Withholding and Estimated Tax Community PropertyCommunity Income Alimony (Community Income) How To Get Tax Help Filing Status Your filing status is used in determining whether you must file a return, your standard deduction, and the correct tax. Free e file It may also be used in determining whether you can claim certain other deductions and credits. Free e file The filing status you can choose depends partly on your marital status on the last day of your tax year. Free e file Marital status. Free e file   If you are unmarried, your filing status is single or, if you meet certain requirements, head of household or qualifying widow(er). Free e file If you are married, your filing status is either married filing a joint return or married filing a separate return. Free e file For information about the single and qualifying widow(er) filing statuses, see Publication 501. Free e file Unmarried persons. Free e file   You are unmarried for the whole year if either of the following applies. Free e file You have obtained a final decree of divorce or separate maintenance by the last day of your tax year. Free e file You must follow your state law to determine if you are divorced or legally separated. Free e file Exception. Free e file If you and your spouse obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to remarry each other and do so in the next tax year, you and your spouse must file as married individuals. Free e file You have obtained a decree of annulment, which holds that no valid marriage ever existed. Free e file You must file amended returns (Form 1040X, Amended U. Free e file S. Free e file Individual Income Tax Return) for all tax years affected by the annulment that are not closed by the statute of limitations. Free e file The statute of limitations generally does not end until 3 years (including extensions) after the date you file your original return or within 2 years after the date you pay the tax. Free e file On the amended return you will change your filing status to single or, if you meet certain requirements, head of household. Free e file Married persons. Free e file   You are married for the whole year if you are separated but you have not obtained a final decree of divorce or separate maintenance by the last day of your tax year. Free e file An interlocutory decree is not a final decree. Free e file Same-sex marriage. Free e file   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Free e file The term "spouse" includes an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law. Free e file However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state (or foreign) law are not considered married for federal tax purposes. Free e file For more details, see Publication 501. Free e file Exception. Free e file   If you live apart from your spouse, under certain circumstances, you may be considered unmarried and can file as head of household. Free e file See Head of Household , later. Free e file Married Filing Jointly If you are married, you and your spouse can choose to file a joint return. Free e file If you file jointly, you both must include all your income, exemptions, deductions, and credits on that return. Free e file You can file a joint return even if one of you had no income or deductions. Free e file If both you and your spouse have income, you should usually figure your tax on both a joint return and separate returns (using the filing status of married filing separately) to see which gives the two of you the lower combined tax. Free e file Nonresident alien. Free e file   To file a joint return, at least one of you must be a U. Free e file S. Free e file citizen or resident alien at the end of the tax year. Free e file If either of you was a nonresident alien at any time during the tax year, you can file a joint return only if you agree to treat the nonresident spouse as a resident of the United States. Free e file This means that your combined worldwide incomes are subject to U. Free e file S. Free e file income tax. Free e file These rules are explained in Publication 519, U. Free e file S. Free e file Tax Guide for Aliens. Free e file Signing a joint return. Free e file   Both you and your spouse generally must sign the return, or it will not be considered a joint return. Free e file Joint and individual liability. Free e file   Both you and your spouse may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. Free e file This means that one spouse may be held liable for all the tax due even if all the income was earned by the other spouse. Free e file Divorced taxpayers. Free e file   If you are divorced, you are jointly and individually responsible for any tax, interest, and penalties due on a joint return for a tax year ending before your divorce. Free e file This responsibility applies even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed joint returns. Free e file Relief from joint liability. Free e file   In some cases, a spouse may be relieved of the tax, interest, and penalties on a joint return. Free e file You can ask for relief no matter how small the liability. Free e file   There are three types of relief available. Free e file Innocent spouse relief. Free e file Separation of liability, which applies to joint filers who are divorced, widowed, legally separated, or who have not lived together for the 12 months ending on the date election of this relief is filed. Free e file Equitable relief. Free e file   Married persons who live in community property states, but who did not file joint returns, may also qualify for relief from liability arising from community property law or for equitable relief. Free e file See Relief from liability arising from community property law , later, under Community Property. Free e file    Each kind of relief has different requirements. Free e file You must file Form 8857 to request relief under any of these categories. Free e file Publication 971 explains these kinds of relief and who may qualify for them. Free e file You can also find information on our website at IRS. Free e file gov. Free e file Tax refund applied to spouse's debts. Free e file   The overpayment shown on your joint return may be used to pay the past-due amount of your spouse's debts. Free e file This includes your spouse's federal tax, state income tax, child or spousal support payments, or a federal nontax debt, such as a student loan. Free e file You can get a refund of your share of the overpayment if you qualify as an injured spouse. Free e file Injured spouse. Free e file   You are an injured spouse if you file a joint return and all or part of your share of the overpayment was, or is expected to be, applied against your spouse's past-due debts. Free e file An injured spouse can get a refund for his or her share of the overpayment that would otherwise be used to pay the past-due amount. Free e file   To be considered an injured spouse, you must: Have made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments), or claimed a refundable tax credit, such as the earned income credit or additional child tax credit on the joint return, and Not be legally obligated to pay the past-due amount. Free e file Note. Free e file If the injured spouse's permanent home is in a community property state, then the injured spouse must only meet (2). Free e file For more information, see Publication 555. Free e file    Refunds that involve community property states must be divided according to local law. Free e file If you live in a community property state in which all community property is subject to the debts of either spouse, your entire refund is generally used to pay those debts. Free e file   If you are an injured spouse, you must file Form 8379 to have your portion of the overpayment refunded to you. Free e file Follow the instructions for the form. Free e file   If you have not filed your joint return and you know that your joint refund will be offset, file Form 8379 with your return. Free e file You should receive your refund within 14 weeks from the date the paper return is filed or within 11 weeks from the date the return is filed electronically. Free e file   If you filed your joint return and your joint refund was offset, file Form 8379 by itself. Free e file When filed after offset, it can take up to 8 weeks to receive your refund. Free e file Do not attach the previously filed tax return, but do include copies of all Forms W-2, Wage and Tax Statement, and W-2G, Certain Gambling Winnings, for both spouses and any Forms 1099 that show income tax withheld. Free e file    An injured spouse claim is different from an innocent spouse relief request. Free e file An injured spouse uses Form 8379 to request an allocation of the tax overpayment attributed to each spouse. Free e file An innocent spouse uses Form 8857 to request relief from joint liability for tax, interest, and penalties on a joint return for items of the other spouse (or former spouse) that were incorrectly reported on or omitted from the joint return. Free e file For information on innocent spouses, see Relief from joint liability, earlier. Free e file Married Filing Separately If you and your spouse file separate returns, you should each report only your own income, exemptions, deductions, and credits on your individual return. Free e file You can file a separate return even if only one of you had income. Free e file For information on exemptions you can claim on your separate return, see Exemptions , later. Free e file Community or separate income. Free e file   If you live in a community property state and file a separate return, your income may be separate income or community income for income tax purposes. Free e file For more information, see Community Income under Community Property, later. Free e file Separate liability. Free e file   If you and your spouse file separately, you each are responsible only for the tax due on your own return. Free e file Itemized deductions. Free e file   If you and your spouse file separate returns and one of you itemizes deductions, the other spouse cannot use the standard deduction and should also itemize deductions. Free e file Table 1. Free e file Itemized Deductions on Separate Returns This table shows itemized deductions you can claim on your married filing separate return whether you paid the expenses separately with your own funds or jointly with your spouse. Free e file  Caution: If you live in a community property state, these rules do not apply. Free e file See Community Property. Free e file IF you paid . Free e file . Free e file . Free e file AND you . Free e file . Free e file . Free e file THEN you can deduct on your separate federal return. Free e file . Free e file . Free e file   medical expenses   paid with funds deposited in a joint checking account in which you and your spouse have an equal interest     half of the total medical expenses, subject to certain limits, unless you can show that you alone paid the expenses. Free e file     state income tax   file a separate state income tax return     the state income tax you alone paid during the year. Free e file         file a joint state income tax return and you and your spouse are jointly and individually liable for the full amount of the state income tax     the state income tax you alone paid during the year. Free e file         file a joint state income tax return and you  are liable for only your own share of state  income tax     the smaller of: the state income tax you alone paid during the year, or the total state income tax you and your spouse paid during the year multiplied by the following fraction. Free e file The numerator is your gross income and the denominator  is your combined gross income. Free e file     property tax   paid the tax on property held as tenants by the entirety     the property tax you alone paid. Free e file     mortgage interest   paid the interest on a qualified home1 held  as tenants by the entirety     the mortgage interest you alone paid. Free e file     casualty loss   have a casualty loss on a home you own  as tenants by the entirety     half of the loss, subject to the deduction limits. Free e file Neither spouse may report the total casualty loss. Free e file 1 For more information on a qualified home and deductible mortgage interest, see Publication 936, Home Mortgage Interest Deduction. Free e file Dividing itemized deductions. Free e file   You may be able to claim itemized deductions on a separate return for certain expenses that you paid separately or jointly with your spouse. Free e file See Table 1, later. Free e file Separate returns may give you a higher tax. Free e file   Some married couples file separate returns because each wants to be responsible only for his or her own tax. Free e file There is no joint liability. Free e file But in almost all instances, if you file separate returns, you will pay more combined federal tax than you would with a joint return. Free e file This is because the following special rules apply if you file a separate return. Free e file Your tax rate generally will be higher than it would be on a joint return. Free e file Your exemption amount for figuring the alternative minimum tax will be half of that allowed a joint return filer. Free e file You cannot take the credit for child and dependent care expenses in most cases. Free e file You cannot take the earned income credit. Free e file You cannot take the exclusion or credit for adoption expenses in most cases. Free e file You cannot take the credit for higher education expenses (American opportunity and lifetime learning credits), the deduction for student loan interest, or the tuition and fees deduction. Free e file You cannot exclude the interest from qualified savings bonds that you used for higher education expenses. Free e file If you lived with your spouse at any time during the tax year: You cannot claim the credit for the elderly or the disabled, and You will have to include in income more (up to 85%) of any social security or equivalent railroad retirement benefits you received. Free e file Your income limits that reduce the child tax credit, the retirement savings contributions credit, itemized deductions, and the deduction for personal exemptions are half of the limits for a joint return filer. Free e file Your capital loss deduction limit is $1,500 (instead of $3,000 on a joint return). Free e file Your basic standard deduction, if allowable, is half of that allowed a joint return filer. Free e file See Itemized deductions , earlier. Free e file Joint return after separate returns. Free e file   If either you or your spouse (or both of you) file a separate return, you generally can change to a joint return within 3 years from the due date (not including extensions) of the separate return or returns. Free e file This applies to a return either of you filed claiming married filing separately, single, or head of household filing status. Free e file Use Form 1040X to change your filing status. Free e file Separate returns after joint return. Free e file   After the due date of your return, you and your spouse cannot file separate returns if you previously filed a joint return. Free e file Exception. Free e file   A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. Free e file The personal representative has 1 year from the due date (including extensions) of the joint return to make the change. Free e file Head of Household Filing as head of household has the following advantages. Free e file You can claim the standard deduction even if your spouse files a separate return and itemizes deductions. Free e file Your standard deduction is higher than is allowed if you claim a filing status of single or married filing separately. Free e file Your tax rate usually will be lower than it is if you claim a filing status of single or married filing separately. Free e file You may be able to claim certain credits (such as the dependent care credit and the earned income credit) you cannot claim if your filing status is married filing separately. Free e file Income limits that reduce your child tax credit, retirement savings contributions credit, itemized deductions, and the deduction for personal exemptions are higher than the income limits if you claim a filing status of married filing separately. Free e file Requirements. Free e file   You may be able to file as head of household if you meet all the following requirements. Free e file You are unmarried or “considered unmarried” on the last day of the year. Free e file You paid more than half the cost of keeping up a home for the year. Free e file A “qualifying person” lived with you in the home for more than half the year (except for temporary absences, such as school). Free e file However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. Free e file See Special rule for parent , later, under Qualifying person. Free e file Considered unmarried. Free e file   You are considered unmarried on the last day of the tax year if you meet all the following tests. Free e file You file a separate return. Free e file A separate return includes a return claiming married filing separately, single, or head of household filing status. Free e file You paid more than half the cost of keeping up your home for the tax year. Free e file Your spouse did not live in your home during the last 6 months of the tax year. Free e file Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. Free e file See Temporary absences , later. Free e file Your home was the main home of your child, stepchild, or foster child for more than half the year. Free e file (See Qualifying person , later, for rules applying to a child's birth, death, or temporary absence during the year. Free e file ) You must be able to claim an exemption for the child. Free e file However, you meet this test if you cannot claim the exemption only because the noncustodial parent can claim the child using the rule described later in Special rule for divorced or separated parents (or parents who live apart) under Exemptions for Dependents. Free e file The general rules for claiming an exemption for a dependent are shown later in Table 3. Free e file    If you were considered married for part of the year and lived in a community property state (one of the states listed later under Community Property), special rules may apply in determining your income and expenses. Free e file See Publication 555 for more information. Free e file Nonresident alien spouse. Free e file   If your spouse was a nonresident alien at any time during the tax year, and you have not chosen to treat your spouse as a resident alien, you are considered unmarried for head of household purposes. Free e file However, your spouse is not a qualifying person for head of household purposes. Free e file You must have another qualifying person and meet the other requirements to file as head of household. Free e file Keeping up a home. Free e file   You are keeping up a home only if you pay more than half the cost of its upkeep for the year. Free e file This includes rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home. Free e file This does not include the cost of clothing, education, medical treatment, vacations, life insurance, or transportation for any member of the household. Free e file Qualifying person. Free e file    Table 2, later, shows who can be a qualifying person. Free e file Any person not described in Table 2 is not a qualifying person. Free e file   Generally, the qualifying person must live with you for more than half of the year. Free e file Table 2. Free e file Who Is a Qualifying Person Qualifying You To File as Head of Household?1 Caution. Free e file See the text of this publication for the other requirements you must meet to claim head of household filing status. Free e file IF the person is your . Free e file . Free e file . Free e file AND . Free e file . Free e file . Free e file THEN that person is . Free e file . Free e file . Free e file   qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)2 he or she is single a qualifying person, whether or not you can claim an exemption for the person. Free e file     he or she is married and you can claim an exemption for him or her a qualifying person. Free e file     he or she is married and you cannot claim an exemption for him or her not a qualifying person. Free e file 3     qualifying relative4 who is your father or mother you can claim an exemption for him or her5 a qualifying person. Free e file 6     you cannot claim an exemption for him or her not a qualifying person. Free e file     qualifying relative4 other than your father or mother (such as a grandparent, brother, or sister who meets certain tests) he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in Publication 501 and you can claim an exemption for him or her5 a qualifying person. Free e file     he or she did not live with you more than half the year not a qualifying person. Free e file     he or she is not related to you in one of the ways listed under Relatives who do not have to live with you in Publication 501 and is your qualifying relative only because he or she lived with you all year as a member of your household not a qualifying person. Free e file     you cannot claim an exemption for him or her not a qualifying person. Free e file   1 A person cannot qualify more than one taxpayer to use the head of household filing status for the year. Free e file 2 See Table 3, later, for the tests that must be met to be a qualifying child. Free e file Note. Free e file If you are a noncustodial parent, the term “qualifying child” for head of household filing status does not include a child who is your qualifying child for exemption purposes only because of the rules described under Children of Divorced or Separated Parents (or Parents Who Live Apart) under Exemptions for Dependents, later. Free e file If you are the custodial parent and those rules apply, the child is generally your qualifying child for head of household filing status even though the child is not a qualifying child for whom you can claim an exemption. Free e file 3 This person is a qualifying person if the only reason you cannot claim the exemption is that you can be claimed as a dependent on someone else's return. Free e file 4 See Table 3, later, for the tests that must be met to be a qualifying relative. Free e file 5 If you can claim an exemption for a person only because of a multiple support agreement, that person is not a qualifying person. Free e file See Multiple Support Agreement in Publication 501. Free e file 6 See Special rule for parent . Free e file Special rule for parent. Free e file   If your qualifying person is your father or mother, you may be eligible to file as head of household even if your father or mother does not live with you. Free e file However, you must be able to claim an exemption for your father or mother. Free e file Also, you must pay more than half the cost of keeping up a home that was the main home for the entire year for your father or mother. Free e file You are keeping up a main home for your father or mother if you pay more than half the cost of keeping your parent in a rest home or home for the elderly. Free e file Death or birth. Free e file   If the person for whom you kept up a home was born or died in 2013, you still may be able to file as head of household. Free e file If the person is your qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. Free e file If the person is anyone else, see Publication 501. Free e file Temporary absences. Free e file   You and your qualifying person are considered to live together even if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service. Free e file It must be reasonable to assume that the absent person will return to the home after the temporary absence. Free e file You must continue to keep up the home during the absence. Free e file Kidnapped child. Free e file   You may be eligible to file as head of household even if the child who is your qualifying person has been kidnapped. Free e file You can claim head of household filing status if all the following statements are true. Free e file The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Free e file In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping. Free e file You would have qualified for head of household filing status if the child had not been kidnapped. Free e file   This treatment applies for all years until the earlier of: The year the child is returned, The year there is a determination that the child is dead, or The year the child would have reached age 18. Free e file More information. Free e file   For more information on filing as head of household, see Publication 501. Free e file Exemptions You can deduct $3,900 for each exemption you claim in 2013. Free e file However, if your adjusted gross income is more than $150,000, see Phaseout of Exemptions , later. Free e file There are two types of exemptions: personal exemptions and exemptions for dependents. Free e file If you are entitled to claim an exemption for a dependent (such as your child), that dependent cannot claim his or her personal exemption on his or her own tax return. Free e file Personal Exemptions You can claim your own exemption unless someone else can claim it. Free e file If you are married, you may be able to take an exemption for your spouse. Free e file These are called personal exemptions. Free e file Exemption for Your Spouse Your spouse is never considered your dependent. Free e file Joint return. Free e file   On a joint return, you can claim one exemption for yourself and one for your spouse. Free e file   If your spouse had any gross income, you can claim his or her exemption only if you file a joint return. Free e file Separate return. Free e file   If you file a separate return, you can take an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. Free e file If your spouse is the dependent of another taxpayer, you cannot claim an exemption for your spouse even if the other taxpayer does not actually claim your spouse's exemption. Free e file Alimony paid. Free e file   If you paid alimony to your spouse, you cannot take an exemption for your spouse. Free e file This is because alimony is gross income to the spouse who received it. Free e file Divorced or separated spouse. Free e file   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. Free e file This rule applies even if you provided all of your former spouse's support. Free e file Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. Free e file You can claim an exemption for a dependent even if your dependent files a return. Free e file The term “dependent” means: A qualifying child, or A qualifying relative. Free e file Table 3 shows the tests that must be met to be either a qualifying child or qualifying relative, plus the additional requirements for claiming an exemption for a dependent. Free e file For detailed information, see Publication 501. Free e file   Dependent not allowed a personal exemption. Free e file If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption on his or her own tax return. Free e file This is true even if you do not claim the dependent's exemption on your return. Free e file It is also true if the decedent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. Free e file Table 3. Free e file Overview of the Rules for Claiming an Exemption for a Dependent Caution. Free e file This table is only an overview of the rules. Free e file For details, see Publication 501. Free e file • You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer. Free e file • You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund and there would be no tax liability for either spouse on separate returns. Free e file • You cannot claim a person as a dependent unless that person is a U. Free e file S. Free e file citizen, U. Free e file S. Free e file resident alien, U. Free e file S. Free e file national, or a resident of Canada or Mexico. Free e file 1 • You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. Free e file   Tests To Be a Qualifying Child   Tests To Be a Qualifying Relative 1. Free e file     2. Free e file       3. Free e file    4. Free e file    5. Free e file    The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Free e file   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled. Free e file   The child must have lived with you for more than half of the year. Free e file 2   The child must not have provided more than half of his or her own support for the year. Free e file   The child is not filing a joint return for the year (unless that joint return is filed only as a claim for refund of withheld income tax or estimated tax paid). Free e file   1. Free e file    2. Free e file       3. Free e file    4. Free e file The person cannot be your qualifying child or the qualifying child of anyone else. Free e file   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you in Publication 501 or (b) must live with you all year as a member of your household 2 (and your relationship must not violate local law). Free e file   The person's gross income for the year must be less than $3,900. Free e file 3   You must provide more than half of the person's total support for the year. Free e file 4 If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. Free e file See Special Rule for Qualifying Child of More Than One Person , later, to find out which person is the person entitled to claim the child as a qualifying child. Free e file     1 Exception exists for certain adopted children. Free e file 2 Exceptions exist for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. Free e file 3 Exception exists for persons who are disabled and have income from a sheltered workshop. Free e file 4 Exceptions exist for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. Free e file See Publication 501. Free e file You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. Free e file For more information, see the instructions for your tax return if you file Form 1040A or 1040. Free e file Children of Divorced or Separated Parents (or Parents Who Live Apart) In most cases, because of the residency test (see item 3 under Tests To Be a Qualifying Child in Table 3), a child of divorced or separated parents is the qualifying child of the custodial parent. Free e file However, the child will be treated as the qualifying child of the noncustodial parent if the special rule (discussed next) applies. Free e file Special rule for divorced or separated parents (or parents who live apart). Free e file   A child will be treated as the qualifying child of his or her noncustodial parent if all four of the following statements are true. Free e file The parents: 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 year, whether or not they are or were married. Free e file The child received over half of his or her support for the year from the parents. Free e file The child is in the custody of one or both parents for more than half of the year. Free e file Either of the following applies. Free e file The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. Free e file (If the decree or agreement went into effect after 1984, see Divorce decree or separation agreement that went into effect after 1984 and before 2009 , later. Free e file A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during 2013. Free e file See Child support under pre-1985 agreement , later. Free e file Custodial parent and noncustodial parent. Free e file   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. Free e file The other parent is the noncustodial parent. Free e file   If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. Free e file   A child is treated as living with a parent for a night if the child sleeps: At that parent's home, whether or not the parent is present, or In the company of the parent, when the child does not sleep at a parent's home (for example, the parent and child are on vacation together). Free e file Equal number of nights. Free e file   If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income. Free e file December 31. Free e file   The night of December 31 is treated as part of the year in which it begins. Free e file For example, December 31, 2013, is treated as part of 2013. Free e file Emancipated child. Free e file   If a child is emancipated under state law, the child is treated as not living with either parent. Free e file See Examples 5 and 6 . Free e file Absences. Free e file    If a child was not with either parent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. Free e file But if it cannot be determined with which parent the child normally would have lived or if the child would not have lived with either parent that night, the child is treated as not living with either parent that night. Free e file Parent works at night. Free e file   If, due to a parent's nighttime work schedule, a child lives for a greater number of days but not nights with the parent who works at night, that parent is treated as the custodial parent. Free e file On a school day, the child is treated as living at the primary residence registered with the school. Free e file Example 1 – child lived with one parent greater number of nights. Free e file You and your child’s other parent are divorced. Free e file In 2013, your child lived with you 210 nights and with the other parent 156 nights. Free e file You are the custodial parent. Free e file Example 2 – child is away at camp. Free e file In 2013, your daughter lives with each parent for alternate weeks. Free e file In the summer, she spends 6 weeks at summer camp. Free e file During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp. Free e file Example 3 – child lived same number of days with each parent. Free e file Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. Free e file Your adjusted gross income is $40,000. Free e file Your ex-spouse's adjusted gross income is $25,000. Free e file You are treated as your son's custodial parent because you have the higher adjusted gross income. Free e file Example 4 – child is at parent’s home but with other parent. Free e file Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. Free e file You become ill and are hospitalized. Free e file The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. Free e file Your son is treated as living with you during this 10-day period because he was living in your home. Free e file Example 5 – child emancipated in May. Free e file When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. Free e file As a result, he is not considered in the custody of his parents for more than half of the year. Free e file The special rule for children of divorced or separated parents (or parents who live apart) does not apply. Free e file Example 6 – child emancipated in August. Free e file Your daughter lives with you from January 1, 2013, until May 31, 2013, and lives with her other parent, your ex-spouse, from June 1, 2013, through the end of the year. Free e file She turns 18 and is emancipated under state law on August 1, 2013. Free e file Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2013. Free e file You are the custodial parent. Free e file Written declaration. Free e file    The custodial parent must use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. Free e file The noncustodial parent must attach a copy of the form or statement to his or her tax return. Free e file   The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. Free e file Divorce decree or separation agreement that went into effect after 1984 and before 2009. Free e file   If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Free e file To be able to do this, the decree or agreement must state all three of the following. Free e file The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. Free e file The custodial parent will not claim the child as a dependent for the year. Free e file The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. Free e file   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her return. Free e file The cover page (write the other parent's social security number on this page). Free e file The pages that include all of the information identified in items (1) through (3) above. Free e file The signature page with the other parent's signature and the date of the agreement. Free e file Post-2008 divorce decree or separation agreement. Free e file   If the decree or agreement went into effect after 2008, a noncustodial parent claiming an exemption for a child cannot attach pages from a divorce decree or separation agreement instead of Form 8332. Free e file The custodial parent must sign either a Form 8332 or a similar statement. Free e file The only purpose of this statement must be to release the custodial parent's claim to the child's exemption. Free e file The noncustodial parent must attach a copy to his or her return. Free e file The form or statement must release the custodial parent's claim to the child without any conditions. Free e file For example, the release must not depend on the noncustodial parent paying support. Free e file    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. Free e file Revocation of release of claim to an exemption. Free e file   The custodial parent can revoke a release of claim to exemption that he or she previously released to the noncustodial parent on Form 8332 or a similar statement. Free e file In order for the revocation to be effective for 2013, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2012 or earlier. Free e file The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation. Free e file Remarried parent. Free e file   If you remarry, the support provided by your new spouse is treated as provided by you. Free e file Child support under pre-1985 agreement. Free e file   All child support payments actually received from the noncustodial parent under a pre-1985 agreement are considered used for the support of the child, even if such amounts are not actually spent for child support. Free e file Example. Free e file Under a pre-1985 agreement, the noncustodial parent provides $1,200 for the child's support. Free e file This amount is considered support provided by the noncustodial parent even if the $1,200 was actually spent on things other than support. Free e file Parents who never married. Free e file   The special rule for divorced or separated parents also applies to parents who never married and lived apart at all times during the last 6 months of the year. Free e file Alimony. Free e file   Payments to your spouse that are includible in his or her gross income as either alimony, separate maintenance payments, or similar payments from an estate or trust, are not treated as a payment for the support of a dependent. Free e file Special Rule for Qualifying Child of More Than One Person If your qualifying child is not a qualifying child of anyone else, this special rule does not apply to you and you do not need to read about it. Free e file This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you file a joint return. Free e file If a child is treated as the qualifying child of the noncustodial parent under the Special rule for divorced or separated parents (or parents who live apart), earlier, see Applying this special rule to divorced or separated parents (or parents who live apart), later. Free e file Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Free e file (For a description of these tests, see list items 1 through 5 under Tests To Be a Qualifying Child in Table 3). Free e file Although the child meets the conditions to be a qualifying child of each of these persons, only one person can actually use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Free e file The exemption for the child. Free e file The child tax credit. Free e file Head of household filing status. Free e file The credit for child and dependent care expenses. Free e file The exclusion from income for dependent care benefits. Free e file The earned income credit. Free e file The other person cannot take any of these benefits based on this qualifying child. Free e file In other words, you and the other person cannot agree to divide these tax benefits between you. Free e file The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Free e file Tiebreaker rules. Free e file   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. Free e file If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Free e file If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Free e file If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Free e file If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Free e file If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Free e file If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' total AGI evenly between them; see Publication 501 for details. Free e file   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Free e file Example 1—separated parents. Free e file You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. Free e file In August and September, your son lived with you. Free e file For the rest of the year, your son lived with your husband, the boy's father. Free e file Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. Free e file At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents (or parents who live apart) does not apply. Free e file You and your husband will file separate returns. Free e file Your husband agrees to let you treat your son as a qualifying child. Free e file This means, if your husband does not claim your son as a qualifying child, you can claim your son as a dependent and treat him as a qualifying child for the child tax credit and exclusion for dependent care benefits, if you qualify for each of those tax benefits. Free e file However, you cannot claim head of household filing status because you and your husband did not live apart the last 6 months of the year. Free e file And, as a result of your filing status being married filing separately, you cannot claim the earned income credit or the credit for child and dependent care expenses. Free e file Example 2—separated parents claim same child. Free e file The facts are the same as in Example 1 except that you and your husband both claim your son as a qualifying child. Free e file In this case, only your husband will be allowed to treat your son as a qualifying child. Free e file This is because, during 2013, the boy lived with him longer than with you. Free e file If you claimed an exemption, the child tax credit, or the exclusion for dependent care benefits for your son, the IRS will disallow your claim to all these tax benefits, unless you have another qualifying child. Free e file In addition, because you and your husband did not live apart the last 6 months of the year, your husband cannot claim head of household filing status. Free e file And, as a result of his filing status being married filing separately, he cannot claim the earned income credit or the credit for child and dependent care expenses. Free e file Applying this special rule to divorced or separated parents (or parents who live apart). Free e file   If a child is treated as the qualifying child of the noncustodial parent under the special rule for divorced or separated parents (or parents who live apart) described earlier, only the noncustodial parent can claim an exemption and the child tax credit for the child. Free e file However, the noncustodial parent cannot claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. Free e file Only the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for those four tax benefits. Free e file If the child is the qualifying child of more than one person for those tax benefits, the tiebreaker rules determine which person can treat the child as a qualifying child. Free e file Example 1. Free e file You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Free e file Your AGI is $10,000. Free e file Your mother's AGI is $25,000. Free e file Your son's father does not live with you or your son. Free e file Under the rules for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child if he meets all the requirements to do so. Free e file Because of this, you cannot claim an exemption or the child tax credit for your son. Free e file However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. Free e file You and your mother did not have any child care expenses or dependent care benefits, but the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. Free e file (Note: The support test does not apply for the earned income credit. Free e file ) However, you agree to let your mother claim your son. Free e file This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. Free e file (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. Free e file ) Example 2. Free e file The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Free e file Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Free e file Example 3. Free e file The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the earned income credit. Free e file Your mother also claims him as a qualifying child for head of household filing status. Free e file You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. Free e file The IRS will disallow your mother's claim to the earned income credit and head of household filing status unless she has another qualifying child. Free e file Phaseout of Exemptions The amount you can claim as a deduction for exemptions is reduced once your adjusted gross income (AGI) goes above a certain level for your filing status. Free e file These levels are as follows:    Filing Status AGI Level That Reduces Exemption Amount Married filing separately $150,000 Single 250,000 Head of household 275,000 Married filing jointly 300,000 Qualifying widow(er) 300,000 You must reduce the dollar amount of your exemptions by 2% for each $2,500, or part of $2,500 ($1,250 if you are married filing separately), that your AGI exceeds the amount shown above for your filing status. Free e file If your AGI exceeds the amount shown above by more than $122,500 ($61,250 if married filing separately), the amount of your deduction for exemptions is reduced to zero. Free e file If your AGI exceeds the level for your filing status, use the Deduction for Exemptions Worksheet found in the instructions for Form 1040 or Form 1040NR to figure the amount of your deduction for exemptions. Free e file Alimony Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Free e file It does not include voluntary payments that are not made under a divorce or separation instrument. Free e file Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. Free e file Although this discussion is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. Free e file To be alimony, a payment must meet certain requirements. Free e file There are some differences between the requirements that apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. Free e file The general requirements that apply to payments regardless of when the divorce or separation instrument was executed and the specific requirements that apply to post-1984 instruments (and, in certain cases, some pre-1985 instruments) are discussed in this publication. Free e file See, Instruments Executed Before 1985 , later, if you are looking for information on where to find the specific requirements that apply to pre-1985 instruments. Free e file Spouse or former spouse. Free e file   Unless otherwise stated, the term “spouse” includes former spouse. Free e file Divorce or separation instrument. Free e file   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. Free e file This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). Free e file Invalid decree. Free e file   Payments under a divorce decree can be alimony even if the decree's validity is in question. Free e file A divorce decree is valid for tax purposes until a court having proper jurisdiction holds it invalid. Free e file Amended instrument. Free e file   An amendment to a divorce decree may change the nature of your payments. Free e file Amendments are not ordinarily retroactive for federal tax purposes. Free e file However, a retroactive amendment to a divorce decree correcting a clerical error to reflect the original intent of the court will generally be effective retroactively for federal tax purposes. Free e file Example 1. Free e file A court order retroactively corrected a mathematical error under your divorce decree to express the original intent to spread the payments over more than 10 years. Free e file This change also is effective retroactively for federal tax purposes. Free e file Example 2. Free e file Your original divorce decree did not fix any part of the payment as child support. Free e file To reflect the true intention of the court, a court order retroactively corrected the error by designating a part of the payment as child support. Free e file The amended order is effective retroactively for federal tax purposes. Free e file Deducting alimony paid. Free e file   You can deduct alimony you paid, whether or not you itemize deductions on your return. Free e file You must file Form 1040. Free e file You cannot use Form 1040A, 1040EZ, or 1040NR. Free e file Enter the amount of alimony you paid on Form 1040, line 31a. Free e file In the space provided on line 31b, enter your spouse's social security number (SSN) or IRS individual taxpayer identification number (ITIN). Free e file If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. Free e file Show the SSN or ITIN and amount paid to each other recipient on an attached statement. Free e file Enter your total payments on line 31a. Free e file If you do not provide your spouse's SSN or ITIN, you may have to pay a $50 penalty and your deduction may be disallowed. Free e file Reporting alimony received. Free e file   Report alimony you received as income on Form 1040, line 11, or on Schedule NEC (Form 1040NR), line 12. Free e file You cannot use Form 1040A, 1040EZ, or 1040NR-EZ. Free e file    You must give the person who paid the alimony your SSN or ITIN. Free e file If you do not, you may have to pay a $50 penalty. Free e file Withholding on nonresident aliens. Free e file   If you are a U. Free e file S. Free e file citizen or resident alien and you pay alimony to a nonresident alien spouse, you may have to withhold income tax at a rate of 30% on each payment. Free e file However, many tax treaties provide for an exemption from withholding for alimony payments. Free e file For more information, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Free e file General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. Free e file Payments not alimony. Free e file   Not all payments under a divorce or separation instrument are alimony. Free e file Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained later under Community Property , Payments to keep up the payer's property, or Use of the payer's property. Free e file Example. Free e file Under your written separation agreement, your spouse lives rent-free in a home you own and you must pay the mortgage, real estate taxes, insurance, repairs, and utilities for the home. Free e file Because you own the home and the debts are yours, your payments for the mortgage, real estate taxes, insurance, and repairs are not alimony. Free e file Neither is the value of your spouse's use of the home. Free e file If they otherwise qualify, you can deduct the payments for utilities as alimony. Free e file Your spouse must report them as income. Free e file If you itemize deductions, you can deduct the real estate taxes and, if the home is a qualified home, you can also include the interest on the mortgage in figuring your deductible interest. Free e file However, if your spouse owned the home, see Example 2 under Payments to a third party, later. Free e file If you owned the home jointly with your spouse, see Table 4. Free e file For more information on a qualified home and deductible mortgage interest, see Publication 936, Home Mortgage Interest Deduction. Free e file Child support. Free e file   To determine whether a payment is child support, see the discussion under Instruments Executed After 1984 , later. Free e file If your divorce or separation agreement was executed before 1985, see the 2004 revision of Publication 504 available at www. Free e file irs. Free e file gov/formspubs. Free e file Underpayment. Free e file   If both alimony and child support payments are called for by your divorce or separation instrument, and you pay less than the total required, the payments apply first to child support and then to alimony. Free e file Example. Free e file Your divorce decree calls for you to pay your former spouse $200 a month ($2,400 ($200 x 12) a year) as child support and $150 a month ($1,800 ($150 x 12) a year) as alimony. Free e file If you pay the full amount of $4,200 ($2,400 + $1,800) during the year, you can deduct $1,800 as alimony and your former spouse must report $1,800 as alimony received. Free e file If you pay only $3,600 during the year, $2,400 is child support. Free e file You can deduct only $1,200 ($3,600 – $2,400) as alimony and your former spouse must report $1,200 as alimony received. Free e file Payments to a third party. Free e file   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. Free e file These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. Free e file ), taxes, tuition, etc. Free e file The payments are treated as received by your spouse and then paid to the third party. Free e file Example 1. Free e file Under your divorce decree, you must pay your former spouse's medical and dental expenses. Free e file If the payments otherwise qualify, you can deduct them as alimony on your return. Free e file Your former spouse must report them as alimony received and can include them in figuring deductible medical expenses. Free e file Example 2. Free e file Under your separation agreement, you must pay the real estate taxes, mortgage payments, and insurance premiums on a home owned by your spouse. Free e file If they otherwise qualify, you can deduct the payments as alimony on your return, and your spouse must report them as alimony received. Free e file If itemizing deductions, your spouse can deduct the real estate taxes and, if the home is a qualified home, also include the interest on the mortgage in figuring deductible interest. Free e file However, if you owned the home, see the example under Payments not alimony , earlier. Free e file If you owned the home jointly with your spouse, see Table 4. Free e file Life insurance premiums. Free e file   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. Free e file Payments for jointly-owned home. Free e file   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse or former spouse, some of your payments may be alimony. Free e file See Table 4. Free e file   However, if your spouse owned the home, see Example 2 under Payments to a third party, earlier. Free e file If you owned the home, see the example under Payments not alimony , earlier. Free e file Table 4. Free e file Expenses for a Jointly-Owned Home Use the table below to find how much of your payment is alimony and how much you can claim as an itemized deduction. Free e file IF you must pay all of the . Free e file . Free e file . Free e file AND your home is . Free e file . Free e file . Free e file THEN you can deduct and your spouse (or former spouse) must include as alimony . Free e file . Free e file . Free e file AND you can claim as an itemized deduction . Free e file . Free e file . Free e file   mortgage payments (principal and interest) jointly owned half of the total payments half of the interest as interest expense (if the home is a qualified home). Free e file 1   real estate taxes and home insurance held as tenants in common half of the total payments half of the real estate taxes2 and none of the home insurance. Free e file     held as tenants by the entirety or in joint tenancy none of the payments all of the real estate taxes and none of the home insurance. Free e file 1 Your spouse (or former spouse) can deduct the other half of the interest if the home is a qualified home. Free e file  2 Your spouse (or former spouse) can deduct the other half of the real estate taxes. Free e file Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. Free e file Exception for instruments executed before 1985. Free e file   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. Free e file A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. Free e file A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. Free e file   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, see the 2004 revision of Publication 504 available at www. Free e file irs. Free e file gov/formspubs. Free e file Example 1. Free e file In November 1984, you and your former spouse executed a written separation agreement. Free e file In February 1985, a decree of divorce was substituted for the written separation agreement. Free e file The decree of divorce did not change the terms for the alimony you pay your former spouse. Free e file The decree of divorce is treated as executed before 1985. Free e file Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. Free e file Example 2. Free e file The facts are the same as in Example 1 except that the decree of divorce changed the amount of the alimony. Free e file In this example, the decree of divorce is not treated as executed before 1985. Free e file The alimony payments are subject to the rules for payments under instruments executed after 1984. Free e file Alimony Requirements A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. Free e file The payment is in cash. Free e file The instrument does not designate the payment as not alimony. Free e file The spouses are not members of the same household at the time the payments are made. Free e file This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance. Free e file There is no liability to make any payment (in cash or property) after the death of the recipient spouse. Free e file The payment is not treated as child support. Free e file Each of these requirements is discussed next. Free e file Cash payment requirement. Free e file   Only cash payments, including checks and money orders, qualify as alimony. Free e file The following do not qualify as alimony. Free e file Transfers of services or property (including a debt instrument of a third party or an annuity contract). Free e file Execution of a debt instrument by the payer. Free e file The use of the payer's property. Free e file Payments to a third party. Free e file   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. Free e file See Payments to a third party under General Rules, earlier. Free e file   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. Free e file The payments are in lieu of payments of alimony directly to your spouse. Free e file The written request states that both spouses intend the payments to be treated as alimony. Free e file You receive the written request from your spouse before you file your return for the year you made the payments. Free e file Payments designated as not alimony. Free e file   You and your spouse can designate that otherwise qualifying payments are not alimony. Free e file You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. Free e file For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). Free e file If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. Free e file   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. Free e file The copy must be attached each year the designation applies. Free e file Spouses cannot be members of the same household. Free e file   Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. Free e file A home you formerly shared is considered one household, even if you physically separate yourselves in the home. Free e file   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. Free e file Exception. Free e file   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. Free e file Liability for payments after death of recipient spouse. Free e file   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony whether made before or after the death. Free e file If all of the payments would continue, then none of the payments made before or after the death are alimony. Free e file   The divorce or separation instrument does not have to expressly state that the payments cease upon the
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The Free E File

Free e file 4. Free e file   Reporting Gains and Losses Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Information Returns Schedule D and Form 8949Long and Short Term Net Gain or Loss Treatment of Capital Losses Capital Gains Tax Rates Form 4797Mark-to-market election. Free e file Introduction This chapter explains how to report capital gains and losses and ordinary gains and losses from sales, exchanges, and other dispositions of property. Free e file Although this discussion refers to Schedule D (Form 1040) and Form 8949, many of the rules discussed here also apply to taxpayers other than individuals. Free e file However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. Free e file Topics - This chapter discusses: Information returns Schedule D (Form 1040) Form 4797 Form 8949 Useful Items - You may want to see: Publication 550 Investment Income and Expenses 537 Installment Sales Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1099-B Proceeds From Broker and Barter Exchange Transactions 1099-S Proceeds From Real Estate Transactions 4684 Casualties and Thefts 4797 Sales of Business Property 6252 Installment Sale Income 6781 Gains and Losses from Section 1256 Contracts and Straddles 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Free e file Information Returns If you sell or exchange certain assets, you should receive an information return showing the proceeds of the sale. Free e file This information is also provided to the IRS. Free e file Form 1099-B. Free e file   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or a substitute statement from the broker. Free e file Use the Form 1099-B or a substitute statement to complete Form 8949 and/or Schedule D. Free e file Whether or not you receive 1099-B, you must report all taxable sales of stock, bonds, commodities, etc. Free e file on Form 8949 and/or Schedule D, as applicable. Free e file For more information on figuring gains and losses from these transactions, see chapter 4 in Publication 550. Free e file For information on reporting the gains and losses, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Free e file Form 1099-S. Free e file   An information return must be provided on certain real estate transactions. Free e file Generally, the person responsible for closing the transaction (the “real estate reporting person”) must report on Form 1099-S sales or exchanges of the following types of property. Free e file Land (improved or unimproved), including air space. Free e file An inherently permanent structure, including any residential, commercial, or industrial building. Free e file A condominium unit and its related fixtures and common elements (including land). Free e file Stock in a cooperative housing corporation. Free e file If you sold or exchanged any of the above types of property, the “real estate reporting person” must give you a copy of Form 1099-S or a statement containing the same information as the Form 1099-S. Free e file The “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. Free e file   For more information see chapter 4 in Publication 550. Free e file Also, see the Instructions for Form 8949. Free e file Schedule D and Form 8949 Form 8949. Free e file   Individuals, corporations, and partnerships, use Form 8949 to report the following. Free e file    Sales or exchanges of capital assets, including stocks, bonds, etc. Free e file , and real estate (if not reported on another form or schedule such as Form 4684, 4797, 6252, 6781, or 8824). Free e file Include these transactions even if you did not receive a Form 1099-B or 1099-S. Free e file Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit. Free e file Nonbusiness bad debts. Free e file   Individuals, If you are filing a joint return, complete as many copies of Form 8949 as you need to report all of your and your spouse's transactions. Free e file You and your spouse may list your transactions on separate forms or you may combine them. Free e file However, you must include on your Schedule D the totals from all Forms 8949 for both you and your spouse. Free e file    Corporations and electing large partnerships also use Form 8949 to report their share of gain or loss from a partnership, S Corporation, estate or trust. Free e file   Business entities meeting certain criteria, may have an exception to some of the normal requirements for completing Form 8949. Free e file See the Instructions for Form 8949. Free e file Schedule D. Free e file    Use Schedule D (Form 1040) to figure the overall gain or loss from transactions reported on Form 8949, and to report certain transactions you do not have to report on Form 8949. Free e file Before completing Schedule D, you may have to complete other forms as shown below. Free e file    Complete all applicable lines of Form 8949 before completing lines 1b, 2, 3, 8b, 9, or 10 of your applicable Schedule D. Free e file Enter on Schedule D the combined totals from all your Forms 8949. Free e file For a sale, exchange, or involuntary conversion of business property, complete Form 4797 (discussed later). Free e file For a like-kind exchange, complete Form 8824. Free e file See Reporting the exchange under Like-Kind Exchanges in chapter 1. Free e file For an installment sale, complete Form 6252. Free e file See Publication 537. Free e file For an involuntary conversion due to casualty or theft, complete Form 4684. Free e file See Publication 547, Casualties, Disasters, and Thefts. Free e file For a disposition of an interest in, or property used in, an activity to which the at-risk rules apply, complete Form 6198, At-Risk Limitations. Free e file See Publication 925, Passive Activity and At-Risk Rules. Free e file For a disposition of an interest in, or property used in, a passive activity, complete Form 8582, Passive Activity Loss Limitations. Free e file See Publication 925. Free e file For gains and losses from section 1256 contracts and straddles, complete Form 6781. Free e file See Publication 550. Free e file Personal-use property. Free e file   Report gain on the sale or exchange of property held for personal use (such as your home) on Form 8949 and Schedule D (Form 1040), as applicable. Free e file Loss from the sale or exchange of property held for personal use is not deductible. Free e file But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, report the transaction on Form 8949 and Schedule D, even though the loss is not deductible. Free e file See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for information on how to report the transaction. Free e file Long and Short Term Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. Free e file The time you own an asset before disposing of it is the holding period. Free e file If you received a Form 1099-B, (or substitute statement) box 1c may help you determine whether the gain or loss is short-term or long-term. Free e file If you hold a capital asset 1 year or less, the gain or loss from its disposition is short term. Free e file Report it in Part I of Form 8949 and/or Schedule D, as applicable. Free e file If you hold a capital asset longer than 1 year, the gain or loss from its disposition is long term. Free e file Report it in Part II of Form 8949 and/or Schedule D, as applicable. Free e file   Table 4-1. Free e file Do I Have a Short-Term or Long-Term Gain or Loss? IF you hold the property. Free e file . Free e file . Free e file  THEN you have a. Free e file . Free e file . Free e file 1 year or less, Short-term capital gain or  loss. Free e file More than 1 year, Long-term capital gain or  loss. Free e file These distinctions are essential to correctly arrive at your net capital gain or loss. Free e file Capital losses are allowed in full against capital gains plus up to $3,000 of ordinary income. Free e file See Capital Gains Tax Rates, later. Free e file Holding period. Free e file   To figure if you held property longer than 1 year, start counting on the day following the day you acquired the property. Free e file The day you disposed of the property is part of your holding period. Free e file Example. Free e file If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Free e file If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year. Free e file Patent property. Free e file   If you dispose of patent property, you generally are considered to have held the property longer than 1 year, no matter how long you actually held it. Free e file For more information, see Patents in chapter 2. Free e file Inherited property. Free e file   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Free e file Installment sale. Free e file   The gain from an installment sale of an asset qualifying for long-term capital gain treatment in the year of sale continues to be long term in later tax years. Free e file If it is short term in the year of sale, it continues to be short term when payments are received in later tax years. Free e file    The date the installment payment is received determines the capital gains rate that should be applied not the date the asset was sold under an installment contract. Free e file Nontaxable exchange. Free e file   If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. Free e file That is, it begins on the same day as your holding period for the old property. Free e file Example. Free e file You bought machinery on December 4, 2012. Free e file On June 4, 2013, you traded this machinery for other machinery in a nontaxable exchange. Free e file On December 5, 2013, you sold the machinery you got in the exchange. Free e file Your holding period for this machinery began on December 5, 2012. Free e file Therefore, you held it longer than 1 year. Free e file Corporate liquidation. Free e file   The holding period for property you receive in a liquidation generally starts on the day after you receive it if gain or loss is recognized. Free e file Profit-sharing plan. Free e file   The holding period of common stock withdrawn from a qualified contributory profit-sharing plan begins on the day following the day the plan trustee delivered the stock to the transfer agent with instructions to reissue the stock in your name. Free e file Gift. Free e file   If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. Free e file For more information on basis, see Publication 551, Basis of Assets. Free e file Real property. Free e file   To figure how long you held real property, start counting on the day after you received title to it or, if earlier, the day after you took possession of it and assumed the burdens and privileges of ownership. Free e file   However, taking possession of real property under an option agreement is not enough to start the holding period. Free e file The holding period cannot start until there is an actual contract of sale. Free e file The holding period of the seller cannot end before that time. Free e file Repossession. Free e file   If you sell real property but keep a security interest in it and then later repossess it, your holding period for a later sale includes the period you held the property before the original sale, as well as the period after the repossession. Free e file Your holding period does not include the time between the original sale and the repossession. Free e file That is, it does not include the period during which the first buyer held the property. Free e file Nonbusiness bad debts. Free e file   Nonbusiness bad debts are short-term capital losses. Free e file For information on nonbusiness bad debts, see chapter 4 of Publication 550. Free e file    Net Gain or Loss The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately. Free e file Net short-term capital gain or loss. Free e file   Combine your short-term capital gains and losses, including your share of short-term capital gains or losses from partnerships, S corporations, and fiduciaries and any short-term capital loss carryover. Free e file Do this by adding all your short-term capital gains. Free e file Then add all your short-term capital losses. Free e file Subtract the lesser total from the other. Free e file The result is your net short-term capital gain or loss. Free e file Net long-term capital gain or loss. Free e file   Follow the same steps to combine your long-term capital gains and losses. Free e file Include the following items. Free e file Net section 1231 gain from Part I, Form 4797, after any adjustment for nonrecaptured section 1231 losses from prior tax years. Free e file Capital gain distributions from regulated investment companies (mutual funds) and real estate investment trusts. Free e file Your share of long-term capital gains or losses from partnerships, S corporations, and fiduciaries. Free e file Any long-term capital loss carryover. Free e file The result from combining these items with other long-term capital gains and losses is your net long-term capital gain or loss. Free e file Net gain. Free e file   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Free e file Different tax rates may apply to the part that is a net capital gain. Free e file See Capital Gains Tax Rates, later. Free e file Net loss. Free e file   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Free e file But there are limits on how much loss you can deduct and when you can deduct it. Free e file See Treatment of Capital Losses, next. Free e file    Treatment of Capital Losses If your capital losses are more than your capital gains, you can deduct the difference as a capital loss deduction even if you do not have ordinary income to offset it. Free e file The yearly limit on the amount of the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return). Free e file Table 4-2. Free e file Holding Period for Different Types of Acquisitions Type of acquisition: When your holding period starts: Stocks and bonds bought on a securities market Day after trading date you bought security. Free e file Ends on trading date you sold security. Free e file U. Free e file S. Free e file Treasury notes and bonds If bought at auction, day after notification of bid acceptance. Free e file If bought through subscription, day after subscription was submitted. Free e file Nontaxable exchanges Day after date you acquired old property. Free e file Gift If your basis is giver's adjusted basis, same day as giver's holding period began. Free e file If your basis is FMV, day after date of gift. Free e file Real property bought Generally, day after date you received title to the property. Free e file Real property repossessed Day after date you originally received title to the property, but does not include time between the original sale and date of repossession. Free e file Capital loss carryover. Free e file   Generally, you have a capital loss carryover if either of the following situations applies to you. Free e file Your net loss is more than the yearly limit. Free e file Your taxable income without your deduction for exemptions is less than zero. Free e file If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carryover to 2014. Free e file Example. Free e file Bob and Gloria Sampson sold property in 2013. Free e file The sale resulted in a capital loss of $7,000. Free e file The Sampsons had no other capital transactions. Free e file On their joint 2013 return, the Sampsons deduct $3,000, the yearly limit. Free e file They had taxable income of $2,000. Free e file The unused part of the loss, $4,000 ($7,000 − $3,000), is carried over to 2014. Free e file If the Sampsons' capital loss had been $2,000, it would not have been more than the yearly limit. Free e file Their capital loss deduction would have been $2,000. Free e file They would have no carryover to 2014. Free e file Short-term and long-term losses. Free e file   When you carry over a loss, it retains its original character as either long term or short term. Free e file A short-term loss you carry over to the next tax year is added to short-term losses occurring in that year. Free e file A long-term loss you carry over to the next tax year is added to long-term losses occurring in that year. Free e file A long-term capital loss you carry over to the next year reduces that year's long-term gains before its short-term gains. Free e file   If you have both short-term and long-term losses, your short-term losses are used first against your allowable capital loss deduction. Free e file If, after using your short-term losses, you have not reached the limit on the capital loss deduction, use your long-term losses until you reach the limit. Free e file To figure your capital loss carryover from 2013 to 2014 use the Capital Loss Carryover Worksheet in the 2013 Instructions for Schedule D (Form 1040). Free e file Joint and separate returns. Free e file   On a joint return, the capital gains and losses of spouses are figured as the gains and losses of an individual. Free e file If you are married and filing a separate return, your yearly capital loss deduction is limited to $1,500. Free e file Neither you nor your spouse can deduct any part of the other's loss. Free e file   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. Free e file However, if you and your spouse once filed jointly and are now filing separately, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. Free e file Death of taxpayer. Free e file   Capital losses cannot be carried over after a taxpayer's death. Free e file They are deductible only on the final income tax return filed on the decedent's behalf. Free e file The yearly limit discussed earlier still applies in this situation. Free e file Even if the loss is greater than the limit, the decedent's estate cannot deduct the difference or carry it over to following years. Free e file Corporations. Free e file   A corporation can deduct capital losses only up to the amount of its capital gains. Free e file In other words, if a corporation has a net capital loss, it cannot be deducted in the current tax year. Free e file It must be carried to other tax years and deducted from capital gains occurring in those years. Free e file For more information, see Publication 542. Free e file Capital Gains Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Free e file These lower rates are called the maximum capital gains rates. Free e file The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Free e file For 2013, the maximum tax rates for individuals are 0%, 15%, 20%, 25%, and 28%. Free e file Also, individuals, use the Qualified Dividends and Capital Gain Worksheet in the Instructions for Form 1040, or the Schedule D Tax Computation Worksheet in the Instructions for Schedule D (Form 1040) (whichever applies) to figure your tax if you have qualified dividends or net capital gain. Free e file For more information, see chapter 4 of Publication 550. Free e file Also see the Instructions for Schedule D (Form 1040). Free e file Unrecaptured section 1250 gain. Free e file   Generally, this is the part of any long-term capital gain on section 1250 property (real property) that is due to depreciation. Free e file Unrecaptured section 1250 gain cannot be more than the net section 1231 gain or include any gain otherwise treated as ordinary income. Free e file Use the worksheet in the Schedule D instructions to figure your unrecaptured section 1250 gain. Free e file For more information about section 1250 property and net section 1231 gain, see chapter 3. Free e file Form 4797 Use Form 4797 to report: The sale or exchange of: Property used in your trade or business; Depreciable and amortizable property; Oil, gas, geothermal, or other mineral properties; and Section 126 property. Free e file The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Free e file The disposition of noncapital assets (other than inventory or property held primarily for sale to customers in the ordinary course of your trade or business). Free e file The disposition of capital assets not reported on Schedule D. Free e file The gain or loss (including any related recapture) for partners and S corporation shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations. Free e file The computation of recapture amounts under sections 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less. Free e file Gains or losses treated as ordinary gains or losses, if you are a trader in securities or commodities and made a mark-to-market election under Internal Revenue Code section 475(f). Free e file You can use Form 4797 with Form 1040, 1065, 1120, or 1120S. Free e file Section 1231 gains and losses. Free e file   Show any section 1231 gains and losses in Part I. Free e file Carry a net gain to Schedule D (Form 1040) as a long-term capital gain. Free e file Carry a net loss to Part II of Form 4797 as an ordinary loss. Free e file   If you had any nonrecaptured net section 1231 losses from the preceding 5 tax years, reduce your net gain by those losses and report the amount of the reduction as an ordinary gain in Part II. Free e file Report any remaining gain on Schedule D (Form 1040). Free e file See Section 1231 Gains and Losses in chapter 3. Free e file Ordinary gains and losses. Free e file   Show any ordinary gains and losses in Part II. Free e file This includes a net loss or a recapture of losses from prior years figured in Part I of Form 4797. Free e file It also includes ordinary gain figured in Part III. Free e file Mark-to-market election. Free e file   If you made a mark-to-market election, you should report all gains and losses from trading as ordinary gains and losses in Part II of Form 4797, instead of as capital gains and losses on Form 8949 and Schedule D (Form 1040). Free e file See the Instructions for Form 4797. Free e file Also see Special Rules for Traders in Securities, in chapter 4 of Publication 550. Free e file Ordinary income from depreciation. Free e file   Figure the ordinary income from depreciation on personal property and additional depreciation on real property (as discussed in chapter 3) in Part III. Free e file Carry the ordinary income to Part II of Form 4797 as an ordinary gain. Free e file Carry any remaining gain to Part I as section 1231 gain, unless it is from a casualty or theft. Free e file Carry any remaining gain from a casualty or theft to Form 4684. Free e file Prev  Up  Next   Home   More Online Publications