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Free Online 1040ez

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Free Online 1040ez

Free online 1040ez Index A Adjusted basis for installment sale, Adjusted basis for installment sale purposes. Free online 1040ez Assistance (see Tax help) B Basis Adjusted, Adjusted basis. Free online 1040ez Assumed mortgage, Buyer Assumes Mortgage Installment obligation, Basis. Free online 1040ez , Basis in installment obligation. Free online 1040ez , Basis in installment obligation. Free online 1040ez Installment sale, Adjusted basis for installment sale purposes. Free online 1040ez Repossessed property, Basis in repossessed property. Free online 1040ez , Basis. Free online 1040ez Bond, Bond. Free online 1040ez Buyer's note, Buyer's note. Free online 1040ez C Contingent payment sale, Contingent Payment Sale Contract price, Contract price. Free online 1040ez D Dealer sales, special rule, Dealer sales. Free online 1040ez Depreciation recapture income, Depreciation Recapture Income Disposition of installment obligation, Disposition of an Installment Obligation E Electing out, Electing Out of the Installment Method Escrow account, Escrow Account F Fair market value, Fair market value (FMV). Free online 1040ez , Fair market value (FMV). Free online 1040ez Figuring installment sale income, Figuring Installment Sale Income Form 4797, Form 4797, Form 4797. Free online 1040ez 6252, Form 6252, Reporting an Installment Sale 8594, Reporting requirement. Free online 1040ez Schedule D (Form 1040), Schedule D (Form 1040), Other forms. Free online 1040ez , Schedule D (Form 1040). Free online 1040ez Free tax services, Free help with your tax return. Free online 1040ez G Gross profit percentage, Gross profit percentage. Free online 1040ez Gross profit, defined, Gross profit. Free online 1040ez Guarantee, Debt not payable on demand. Free online 1040ez H Help (see Tax help) I Installment obligation Defined, Installment obligation. Free online 1040ez Disposition, Disposition of an Installment Obligation Used as security, Installment Obligation Used as Security (Pledge Rule) Installment Sale, What Is an Installment Sale? Interest Escrow account, Escrow Account Income, Interest Income Reporting, Seller-financed mortgage. Free online 1040ez Unstated, Installment income after 2013. Free online 1040ez Interest on deferred tax, Interest on Deferred Tax Exceptions, Exceptions. Free online 1040ez L Like-kind exchange, Like-Kind Exchange N Note Buyer's, Buyer's note. Free online 1040ez Third-party, Third-party note. Free online 1040ez O Original issue discount, Installment income after 2013. Free online 1040ez P Payments considered received, Payments Received or Considered Received Buyer assumes debts, Buyer Assumes Other Debts Buyer pays seller's expenses, Buyer Pays Seller's Expenses Mortgage assumed, Buyer Assumes Mortgage Pledge rule, Installment Obligation Used as Security (Pledge Rule) Payments received, Payments Received or Considered Received Pledge rule, Installment Obligation Used as Security (Pledge Rule) Publications (see Tax help) R Related person Land sale, Land transfers between related persons. Free online 1040ez Reporting sale to, Related person. Free online 1040ez Sale to, Sale to a Related Person Reporting installment sale, Reporting Installment Sale Income, Reporting an Installment Sale Repossession, Repossession Holding period for resale, Holding period for resales. Free online 1040ez Personal property, Personal Property Real property, Real Property S Sale at a loss, Sale at a loss. Free online 1040ez Sale of Business, Sale of a Business Home, Sale of Your Home Land between related persons, Land transfers between related persons. Free online 1040ez Partnership interest, Sale of Partnership Interest Several assets, Single Sale of Several Assets, Several assets. Free online 1040ez Stock or securities, Stock or securities. Free online 1040ez Sales by dealers, Dealer sales. Free online 1040ez Section 1274, Section 1274 Exceptions, Exceptions to Sections 1274 and 483 Section 483, Section 483 Exceptions, Exceptions to Sections 1274 and 483 Selling expenses, Selling expenses. Free online 1040ez Selling price Defined, Selling price. Free online 1040ez Reduced, Selling Price Reduced Single sale of several assets, Single Sale of Several Assets, Several assets. Free online 1040ez T Tax help, How To Get Tax Help Third-party note, Third-party note. Free online 1040ez TTY/TDD information, How To Get Tax Help U Unstated interest, Installment income after 2013. Free online 1040ez Prev  Up     Home   More Online Publications
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Native American and Tribal Education, Jobs, and Economic Development

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Free online 1040ez 22. Free online 1040ez   Taxes Table of Contents IntroductionIndian tribal government. Free online 1040ez Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Free online 1040ez Real Estate TaxesReal estate taxes for prior years. Free online 1040ez Examples. Free online 1040ez Form 1099-S. Free online 1040ez Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Free online 1040ez It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Free online 1040ez This chapter covers the following topics. Free online 1040ez Income taxes (federal, state, local, and foreign). Free online 1040ez General sales taxes (state and local). Free online 1040ez Real estate taxes (state, local, and foreign). Free online 1040ez Personal property taxes (state and local). Free online 1040ez Taxes and fees you cannot deduct. Free online 1040ez Use Table 22-1 as a guide to determine which taxes you can deduct. Free online 1040ez The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Free online 1040ez Business taxes. Free online 1040ez   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Free online 1040ez For information on these taxes, see Publication 535, Business Expenses. Free online 1040ez State or local taxes. Free online 1040ez   These are taxes imposed by the 50 states, U. Free online 1040ez S. Free online 1040ez possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Free online 1040ez Indian tribal government. Free online 1040ez   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Free online 1040ez Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Free online 1040ez General sales taxes. Free online 1040ez   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Free online 1040ez Foreign taxes. Free online 1040ez   These are taxes imposed by a foreign country or any of its political subdivisions. Free online 1040ez Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Free online 1040ez The tax must be imposed on you. Free online 1040ez You must pay the tax during your tax year. Free online 1040ez The tax must be imposed on you. Free online 1040ez   In general, you can deduct only taxes imposed on you. Free online 1040ez   Generally, you can deduct property taxes only if you are an owner of the property. Free online 1040ez If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Free online 1040ez You must pay the tax during your tax year. Free online 1040ez   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Free online 1040ez If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Free online 1040ez If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Free online 1040ez If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Free online 1040ez See Publication 538, Accounting Periods and Methods, for details. Free online 1040ez    If you use an accrual method of accounting, see Publication 538 for more information. Free online 1040ez Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Free online 1040ez State and Local Income Taxes You can deduct state and local income taxes. Free online 1040ez However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Free online 1040ez See General Sales Taxes , later. Free online 1040ez Exception. Free online 1040ez    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Free online 1040ez For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Free online 1040ez What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Free online 1040ez Withheld taxes. Free online 1040ez   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Free online 1040ez Your Form(s) W-2 will show these amounts. Free online 1040ez Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Free online 1040ez Estimated tax payments. Free online 1040ez   You can deduct estimated tax payments you made during the year to a state or local government. Free online 1040ez However, you must have a reasonable basis for making the estimated tax payments. Free online 1040ez Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Free online 1040ez For example, you made an estimated state income tax payment. Free online 1040ez However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Free online 1040ez You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Free online 1040ez Refund applied to taxes. Free online 1040ez   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Free online 1040ez    Do not reduce your deduction by either of the following items. Free online 1040ez Any state or local income tax refund (or credit) you expect to receive for 2013. Free online 1040ez Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Free online 1040ez   However, part or all of this refund (or credit) may be taxable. Free online 1040ez See Refund (or credit) of state or local income taxes , later. Free online 1040ez Separate federal returns. Free online 1040ez   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Free online 1040ez Joint state and local returns. Free online 1040ez   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Free online 1040ez You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Free online 1040ez However, you cannot deduct more than the amount you actually paid during the year. Free online 1040ez You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Free online 1040ez If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Free online 1040ez Joint federal return. Free online 1040ez   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Free online 1040ez Contributions to state benefit funds. Free online 1040ez    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Free online 1040ez For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Free online 1040ez Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Free online 1040ez Alaska Unemployment Compensation Fund. Free online 1040ez California Nonoccupational Disability Benefit Fund. Free online 1040ez New Jersey Nonoccupational Disability Benefit Fund. Free online 1040ez New Jersey Unemployment Compensation Fund. Free online 1040ez New York Nonoccupational Disability Benefit Fund. Free online 1040ez Pennsylvania Unemployment Compensation Fund. Free online 1040ez Rhode Island Temporary Disability Benefit Fund. Free online 1040ez Washington State Supplemental Workmen's Compensation Fund. Free online 1040ez    Employee contributions to private or voluntary disability plans are not deductible. Free online 1040ez Refund (or credit) of state or local income taxes. Free online 1040ez   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Free online 1040ez This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Free online 1040ez If you did not itemize your deductions in the previous year, do not include the refund in income. Free online 1040ez If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Free online 1040ez For a discussion of how much to include, see Recoveries in chapter 12. Free online 1040ez Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Free online 1040ez S. Free online 1040ez possession. Free online 1040ez However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Free online 1040ez S. Free online 1040ez tax under the foreign earned income exclusion or the foreign housing exclusion. Free online 1040ez For information on these exclusions, see Publication 54, Tax Guide for U. Free online 1040ez S. Free online 1040ez Citizens and Resident Aliens Abroad. Free online 1040ez For information on the foreign tax credit, see Publication 514. Free online 1040ez General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Free online 1040ez You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Free online 1040ez Actual expenses. Free online 1040ez   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Free online 1040ez However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Free online 1040ez If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Free online 1040ez If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Free online 1040ez Do not include sales taxes paid on items used in your trade or business. Free online 1040ez Motor vehicles. Free online 1040ez   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Free online 1040ez This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Free online 1040ez Optional sales tax tables. Free online 1040ez   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Free online 1040ez You may also be able to add the state and local general sales taxes paid on certain specified items. Free online 1040ez   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Free online 1040ez Your income is your adjusted gross income plus any nontaxable items such as the following. Free online 1040ez Tax-exempt interest. Free online 1040ez Veterans' benefits. Free online 1040ez Nontaxable combat pay. Free online 1040ez Workers' compensation. Free online 1040ez Nontaxable part of social security and railroad retirement benefits. Free online 1040ez Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Free online 1040ez Public assistance payments. Free online 1040ez If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Free online 1040ez See the Instructions for Schedule A (Form 1040), line 5, for details. Free online 1040ez Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Free online 1040ez You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Free online 1040ez Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Free online 1040ez They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Free online 1040ez For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Free online 1040ez Tenant-shareholders in a cooperative housing corporation. Free online 1040ez   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Free online 1040ez The corporation should provide you with a statement showing your share of the taxes. Free online 1040ez For more information, see Special Rules for Cooperatives in Publication 530. Free online 1040ez Division of real estate taxes between buyers and sellers. Free online 1040ez   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Free online 1040ez   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Free online 1040ez The seller is treated as paying the taxes up to, but not including, the date of sale. Free online 1040ez The buyer is treated as paying the taxes beginning with the date of sale. Free online 1040ez This applies regardless of the lien dates under local law. Free online 1040ez Generally, this information is included on the settlement statement provided at the closing. Free online 1040ez    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Free online 1040ez This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Free online 1040ez However, you must also include the amount of that tax in the selling price of the property. Free online 1040ez The buyer must include the same amount in his or her cost of the property. Free online 1040ez   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Free online 1040ez Worksheet 22-1. Free online 1040ez Figuring Your Real Estate Tax Deduction 1. Free online 1040ez Enter the total real estate taxes for the real property tax year   2. Free online 1040ez Enter the number of days in the real property tax year that you owned the property   3. Free online 1040ez Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free online 1040ez 4. Free online 1040ez Multiply line 1 by line 3. Free online 1040ez This is your deduction. Free online 1040ez Enter it on Schedule A (Form 1040), line 6   Note. Free online 1040ez Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Free online 1040ez Your total deduction is the sum of the line 4 amounts for all of the properties. Free online 1040ez Real estate taxes for prior years. Free online 1040ez   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Free online 1040ez Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Free online 1040ez The buyer must add them to the cost of the property. Free online 1040ez The seller can deduct these taxes paid by the buyer. Free online 1040ez However, the seller must include them in the selling price. Free online 1040ez Examples. Free online 1040ez   The following examples illustrate how real estate taxes are divided between buyer and seller. Free online 1040ez Example 1. Free online 1040ez Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Free online 1040ez The tax on their old home, sold on May 7, was $620. Free online 1040ez The tax on their new home, bought on May 3, was $732. Free online 1040ez Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Free online 1040ez On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Free online 1040ez Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Free online 1040ez They figure their deduction for taxes on their old home as follows. Free online 1040ez Worksheet 22-1. Free online 1040ez Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Free online 1040ez Enter the total real estate taxes for the real property tax year $620 2. Free online 1040ez Enter the number of days in the real property tax year that you owned the property 126 3. Free online 1040ez Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free online 1040ez 3452 4. Free online 1040ez Multiply line 1 by line 3. Free online 1040ez This is your deduction. Free online 1040ez Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Free online 1040ez (The buyers add the $214 to their cost of the home. Free online 1040ez ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Free online 1040ez They figure their deduction for taxes on their new home as follows. Free online 1040ez Worksheet 22-1. Free online 1040ez Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free online 1040ez Enter the total real estate taxes for the real property tax year $732 2. Free online 1040ez Enter the number of days in the real property tax year that you owned the property 243 3. Free online 1040ez Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free online 1040ez 6658 4. Free online 1040ez Multiply line 1 by line 3. Free online 1040ez This is your deduction. Free online 1040ez Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Free online 1040ez (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Free online 1040ez ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Free online 1040ez They will enter this amount on Schedule A (Form 1040), line 6. Free online 1040ez Example 2. Free online 1040ez George and Helen Brown bought a new home on May 3, 2013. Free online 1040ez Their real property tax year for the new home is the calendar year. Free online 1040ez Real estate taxes for 2012 were assessed in their state on January 1, 2013. Free online 1040ez The taxes became due on May 31, 2013, and October 31, 2013. Free online 1040ez The Browns agreed to pay all taxes due after the date of purchase. Free online 1040ez Real estate taxes for 2012 were $680. Free online 1040ez They paid $340 on May 31, 2013, and $340 on October 31, 2013. Free online 1040ez These taxes were for the 2012 real property tax year. Free online 1040ez The Browns cannot deduct them since they did not own the property until 2013. Free online 1040ez Instead, they must add $680 to the cost of their new home. Free online 1040ez In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Free online 1040ez The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Free online 1040ez They will figure their 2014 deduction for taxes as follows. Free online 1040ez Worksheet 22-1. Free online 1040ez Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Free online 1040ez Enter the total real estate taxes for the real property tax year $752 2. Free online 1040ez Enter the number of days in the real property tax year that you owned the property 243 3. Free online 1040ez Divide line 2 by 365 (for leap years, divide line 2 by 366) . Free online 1040ez 6658 4. Free online 1040ez Multiply line 1 by line 3. Free online 1040ez This is your deduction. Free online 1040ez Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Free online 1040ez Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Free online 1040ez This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Free online 1040ez The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Free online 1040ez The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Free online 1040ez Form 1099-S. Free online 1040ez   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Free online 1040ez Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Free online 1040ez The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Free online 1040ez   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Free online 1040ez The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Free online 1040ez See Refund (or rebate) , later. Free online 1040ez Taxes placed in escrow. Free online 1040ez   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Free online 1040ez You can deduct only the real estate tax that the third party actually paid to the taxing authority. Free online 1040ez If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Free online 1040ez Tenants by the entirety. Free online 1040ez   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Free online 1040ez Divorced individuals. Free online 1040ez   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Free online 1040ez See Taxes and insurance in chapter 18 for more information. Free online 1040ez Ministers' and military housing allowances. Free online 1040ez   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Free online 1040ez Refund (or rebate). Free online 1040ez   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Free online 1040ez If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Free online 1040ez However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Free online 1040ez For more information, see Recoveries in chapter 12. Free online 1040ez Table 22-1. Free online 1040ez Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Free online 1040ez Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Free online 1040ez     Fines and penalties. Free online 1040ez Income Taxes State and local income taxes. Free online 1040ez Federal income taxes. Free online 1040ez   Foreign income taxes. Free online 1040ez     Employee contributions to state funds listed under Contributions to state benefit funds . Free online 1040ez Employee contributions to private or voluntary disability plans. Free online 1040ez     State and local general sales taxes if you choose to deduct state and local income taxes. Free online 1040ez General Sales Taxes State and local general sales taxes, including compensating use taxes. Free online 1040ez State and local income taxes if you choose to deduct state and local general sales taxes. Free online 1040ez Other Taxes Taxes that are expenses of your trade or business. Free online 1040ez Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Free online 1040ez   Taxes on property producing rent or royalty income. Free online 1040ez Per capita taxes. Free online 1040ez   Occupational taxes. Free online 1040ez See chapter 28. Free online 1040ez     One-half of self-employment tax paid. Free online 1040ez   Personal Property Taxes State and local personal property taxes. Free online 1040ez Customs duties that are not expenses of your trade or business or of producing income. Free online 1040ez Real Estate Taxes State and local real estate taxes. Free online 1040ez Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Free online 1040ez   Foreign real estate taxes. Free online 1040ez Taxes for local benefits (with exceptions). Free online 1040ez See Real Estate-Related Items You Cannot Deduct . Free online 1040ez   Tenant's share of real estate taxes paid by  cooperative housing corporation. Free online 1040ez Trash and garbage pickup fees (with exceptions). Free online 1040ez See Real Estate-Related Items You Cannot Deduct . Free online 1040ez     Rent increase due to higher real estate taxes. Free online 1040ez     Homeowners' association charges. Free online 1040ez Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Free online 1040ez Taxes for local benefits. Free online 1040ez Itemized charges for services (such as trash and garbage pickup fees). Free online 1040ez Transfer taxes (or stamp taxes). Free online 1040ez Rent increases due to higher real estate taxes. Free online 1040ez Homeowners' association charges. Free online 1040ez Taxes for local benefits. Free online 1040ez   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Free online 1040ez These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Free online 1040ez You should increase the basis of your property by the amount of the assessment. Free online 1040ez   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Free online 1040ez If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Free online 1040ez If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Free online 1040ez    Taxes for local benefits may be included in your real estate tax bill. Free online 1040ez If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free online 1040ez You should use the rules above to determine if the local benefit tax is deductible. Free online 1040ez Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Free online 1040ez Itemized charges for services. Free online 1040ez    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Free online 1040ez For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Free online 1040ez    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Free online 1040ez If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Free online 1040ez Exception. Free online 1040ez   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Free online 1040ez Transfer taxes (or stamp taxes). Free online 1040ez   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Free online 1040ez If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Free online 1040ez If paid by the buyer, they are included in the cost basis of the property. Free online 1040ez Rent increase due to higher real estate taxes. Free online 1040ez   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Free online 1040ez Homeowners' association charges. Free online 1040ez   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Free online 1040ez Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Free online 1040ez A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Free online 1040ez For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Free online 1040ez If the tax is partly based on value and partly based on other criteria, it may qualify in part. Free online 1040ez Example. Free online 1040ez Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Free online 1040ez You paid $32 based on the value ($1,500) and weight (3,400 lbs. Free online 1040ez ) of your car. Free online 1040ez You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Free online 1040ez The remaining $17 ($. Free online 1040ez 50 × 34), based on the weight, is not deductible. Free online 1040ez Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Free online 1040ez Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Free online 1040ez See Table 22-1. Free online 1040ez Taxes and fees that are generally not deductible include the following items. Free online 1040ez Employment taxes. Free online 1040ez This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Free online 1040ez However, one-half of self-employment tax you pay is deductible. Free online 1040ez In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Free online 1040ez For more information, see chapters 21 and 32. Free online 1040ez Estate, inheritance, legacy, or succession taxes. Free online 1040ez However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Free online 1040ez In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Free online 1040ez For more information, see Publication 559, Survivors, Executors, and Administrators. Free online 1040ez Federal income taxes. Free online 1040ez This includes income taxes withheld from your pay. Free online 1040ez Fines and penalties. Free online 1040ez You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Free online 1040ez Gift taxes. Free online 1040ez License fees. Free online 1040ez You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Free online 1040ez Per capita taxes. Free online 1040ez You cannot deduct state or local per capita taxes. Free online 1040ez Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Free online 1040ez For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Free online 1040ez Where To Deduct You deduct taxes on the following schedules. Free online 1040ez State and local income taxes. Free online 1040ez    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Free online 1040ez Check box a on line 5. Free online 1040ez General sales taxes. Free online 1040ez   Sales taxes are deducted on Schedule A (Form 1040), line 5. Free online 1040ez You must check box b on line 5. Free online 1040ez If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Free online 1040ez Foreign income taxes. Free online 1040ez   Generally, income taxes you pay to a foreign country or U. Free online 1040ez S. Free online 1040ez possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Free online 1040ez S. Free online 1040ez income tax on Form 1040, line 47. Free online 1040ez To claim the credit, you may have to complete and attach Form 1116. Free online 1040ez For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Free online 1040ez Real estate taxes and personal property taxes. Free online 1040ez    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Free online 1040ez Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Free online 1040ez Self-employment tax. Free online 1040ez    Deduct one-half of your self-employment tax on Form 1040, line 27. Free online 1040ez Other taxes. Free online 1040ez    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Free online 1040ez Prev  Up  Next   Home   More Online Publications