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Free Online State And Federal Tax Filing

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Free Online State And Federal Tax Filing

Free online state and federal tax filing 5. Free online state and federal tax filing   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Free online state and federal tax filing Free help with your tax return. Free online state and federal tax filing   You can get free help preparing your return nationwide from IRS-certified volunteers. Free online state and federal tax filing The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Free online state and federal tax filing The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free online state and federal tax filing Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Free online state and federal tax filing In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Free online state and federal tax filing To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Free online state and federal tax filing gov, download the IRS2Go app, or call 1-800-906-9887. Free online state and federal tax filing   As part of the TCE program, AARP offers the Tax-Aide counseling program. Free online state and federal tax filing To find the nearest AARP Tax-Aide site, visit AARP's website at www. Free online state and federal tax filing aarp. Free online state and federal tax filing org/money/taxaide or call 1-888-227-7669. Free online state and federal tax filing For more information on these programs, go to IRS. Free online state and federal tax filing gov and enter “VITA” in the search box. Free online state and federal tax filing Internet. Free online state and federal tax filing    IRS. Free online state and federal tax filing gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Free online state and federal tax filing Download the free IRS2Go app from the iTunes app store or from Google Play. Free online state and federal tax filing Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Free online state and federal tax filing Check the status of your 2013 refund with the Where's My Refund? application on IRS. Free online state and federal tax filing gov or download the IRS2Go app and select the Refund Status option. Free online state and federal tax filing The IRS issues more than 9 out of 10 refunds in less than 21 days. Free online state and federal tax filing Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Free online state and federal tax filing You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free online state and federal tax filing The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free online state and federal tax filing Use the Interactive Tax Assistant (ITA) to research your tax questions. Free online state and federal tax filing No need to wait on the phone or stand in line. Free online state and federal tax filing The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Free online state and federal tax filing When you reach the response screen, you can print the entire interview and the final response for your records. Free online state and federal tax filing New subject areas are added on a regular basis. Free online state and federal tax filing  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Free online state and federal tax filing gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Free online state and federal tax filing You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Free online state and federal tax filing The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Free online state and federal tax filing When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Free online state and federal tax filing Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Free online state and federal tax filing You can also ask the IRS to mail a return or an account transcript to you. Free online state and federal tax filing Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Free online state and federal tax filing gov or by calling 1-800-908-9946. Free online state and federal tax filing Tax return and tax account transcripts are generally available for the current year and the past three years. Free online state and federal tax filing Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Free online state and federal tax filing Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Free online state and federal tax filing If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Free online state and federal tax filing Check the status of your amended return using Where's My Amended Return? Go to IRS. Free online state and federal tax filing gov and enter Where's My Amended Return? in the search box. Free online state and federal tax filing You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free online state and federal tax filing It can take up to 3 weeks from the date you mailed it to show up in our system. Free online state and federal tax filing Make a payment using one of several safe and convenient electronic payment options available on IRS. Free online state and federal tax filing gov. Free online state and federal tax filing Select the Payment tab on the front page of IRS. Free online state and federal tax filing gov for more information. Free online state and federal tax filing Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Free online state and federal tax filing Figure your income tax withholding with the IRS Withholding Calculator on IRS. Free online state and federal tax filing gov. Free online state and federal tax filing Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Free online state and federal tax filing Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Free online state and federal tax filing gov. Free online state and federal tax filing Request an Electronic Filing PIN by going to IRS. Free online state and federal tax filing gov and entering Electronic Filing PIN in the search box. Free online state and federal tax filing Download forms, instructions and publications, including accessible versions for people with disabilities. Free online state and federal tax filing Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Free online state and federal tax filing gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Free online state and federal tax filing An employee can answer questions about your tax account or help you set up a payment plan. Free online state and federal tax filing Before you visit, check the Office Locator on IRS. Free online state and federal tax filing gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Free online state and federal tax filing If you have a special need, such as a disability, you can request an appointment. Free online state and federal tax filing Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Free online state and federal tax filing Apply for an Employer Identification Number (EIN). Free online state and federal tax filing Go to IRS. Free online state and federal tax filing gov and enter Apply for an EIN in the search box. Free online state and federal tax filing Read the Internal Revenue Code, regulations, or other official guidance. Free online state and federal tax filing Read Internal Revenue Bulletins. Free online state and federal tax filing Sign up to receive local and national tax news and more by email. Free online state and federal tax filing Just click on “subscriptions” above the search box on IRS. Free online state and federal tax filing gov and choose from a variety of options. Free online state and federal tax filing Phone. Free online state and federal tax filing   You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Free online state and federal tax filing Download the free IRS2Go app from the iTunes app store or from Google Play. Free online state and federal tax filing Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Free online state and federal tax filing gov, or download the IRS2Go app. Free online state and federal tax filing Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Free online state and federal tax filing The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Free online state and federal tax filing Most VITA and TCE sites offer free electronic filing. Free online state and federal tax filing Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Free online state and federal tax filing Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Free online state and federal tax filing Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Free online state and federal tax filing If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Free online state and federal tax filing The IRS issues more than 9 out of 10 refunds in less than 21 days. Free online state and federal tax filing Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Free online state and federal tax filing Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Free online state and federal tax filing The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Free online state and federal tax filing Note, the above information is for our automated hotline. Free online state and federal tax filing Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Free online state and federal tax filing Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Free online state and federal tax filing You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Free online state and federal tax filing It can take up to 3 weeks from the date you mailed it to show up in our system. Free online state and federal tax filing Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Free online state and federal tax filing You should receive your order within 10 business days. Free online state and federal tax filing Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Free online state and federal tax filing If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Free online state and federal tax filing Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Free online state and federal tax filing The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Free online state and federal tax filing These individuals can also contact the IRS through relay services such as the Federal Relay Service. Free online state and federal tax filing Walk-in. Free online state and federal tax filing   You can find a selection of forms, publications and services — in-person. Free online state and federal tax filing Products. Free online state and federal tax filing You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Free online state and federal tax filing Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Free online state and federal tax filing Services. Free online state and federal tax filing You can walk in to your local TAC for face-to-face tax help. Free online state and federal tax filing An employee can answer questions about your tax account or help you set up a payment plan. Free online state and federal tax filing Before visiting, use the Office Locator tool on IRS. Free online state and federal tax filing gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Free online state and federal tax filing Mail. Free online state and federal tax filing   You can send your order for forms, instructions, and publications to the address below. Free online state and federal tax filing You should receive a response within 10 business days after your request is received. Free online state and federal tax filing Internal Revenue Service 1201 N. Free online state and federal tax filing Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. Free online state and federal tax filing The Taxpayer Advocate Service (TAS) is your voice at the IRS. Free online state and federal tax filing Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Free online state and federal tax filing   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Free online state and federal tax filing We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Free online state and federal tax filing You face (or your business is facing) an immediate threat of adverse action. Free online state and federal tax filing You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Free online state and federal tax filing   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Free online state and federal tax filing Here's why we can help: TAS is an independent organization within the IRS. Free online state and federal tax filing Our advocates know how to work with the IRS. Free online state and federal tax filing Our services are free and tailored to meet your needs. Free online state and federal tax filing We have offices in every state, the District of Columbia, and Puerto Rico. Free online state and federal tax filing   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Free online state and federal tax filing   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Free online state and federal tax filing If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Free online state and federal tax filing Prev  Up  Next   Home   More Online Publications
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The Free Online State And Federal Tax Filing

Free online state and federal tax filing 1. Free online state and federal tax filing   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Free online state and federal tax filing Custodian account for your child. Free online state and federal tax filing Penalty for failure to supply SSN. Free online state and federal tax filing Certification. Free online state and federal tax filing Underreported interest and dividends. Free online state and federal tax filing How to stop backup withholding due to underreporting. Free online state and federal tax filing How to stop backup withholding due to an incorrect identification number. Free online state and federal tax filing Reporting backup withholding. Free online state and federal tax filing Nonresident aliens. Free online state and federal tax filing Penalties. Free online state and federal tax filing Savings account with parent as trustee. Free online state and federal tax filing Interest IncomeInterest not reported on Form 1099-INT. Free online state and federal tax filing Nominees. Free online state and federal tax filing Incorrect amount. Free online state and federal tax filing Information reporting requirement. Free online state and federal tax filing Taxable Interest — General Below-Market Loans U. Free online state and federal tax filing S. Free online state and federal tax filing Savings Bonds U. Free online state and federal tax filing S. Free online state and federal tax filing Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Discount on Debt InstrumentsOriginal Issue Discount (OID) Market Discount Bonds Discount on Short-Term Obligations Election To Report All Interest as OID When To Report Interest IncomeConstructive receipt. Free online state and federal tax filing How To Report Interest IncomeSchedule B (Form 1040A or 1040). Free online state and federal tax filing Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Free online state and federal tax filing File Form 1099-INT with the IRS. Free online state and federal tax filing Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Free online state and federal tax filing Nominees. Free online state and federal tax filing Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Free online state and federal tax filing Independent contractor. Free online state and federal tax filing Investment interest deducted. Free online state and federal tax filing Exception 1. Free online state and federal tax filing Exception 2. Free online state and federal tax filing Undistributed capital gains. Free online state and federal tax filing File Form 1099-DIV with the IRS. Free online state and federal tax filing Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Free online state and federal tax filing Passive activity losses. Free online state and federal tax filing Form 8582. Free online state and federal tax filing Investment ClubsInvestments in name of member. Free online state and federal tax filing Tax Treatment of the Club Topics - This chapter discusses: Interest Income , Discount on Debt Instruments , When To Report Interest Income , How To Report Interest Income , Dividends and Other Distributions , How To Report Dividend Income , Stripped Preferred Stock , Real estate mortgage investment conduits (REMICs), financial asset securitization investment trusts (FASITs), and other collateralized debt obligations (CDOs) , S Corporations , and Investment Clubs . Free online state and federal tax filing Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 537 Installment Sales 590 Individual Retirement Arrangements (IRAs) 925 Passive Activity and At-Risk Rules 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses 1040 U. Free online state and federal tax filing S. Free online state and federal tax filing Individual Income Tax Return 1040A U. Free online state and federal tax filing S. Free online state and federal tax filing Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1099 General Instructions for Certain Information Returns 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 3115 Application for Change in Accounting Method 6251 Alternative Minimum Tax — Individuals 8582 Passive Activity Loss Limitations 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 8815 Exclusion of Interest From Series EE and I U. Free online state and federal tax filing S. Free online state and federal tax filing Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Free online state and federal tax filing S. Free online state and federal tax filing Savings Bonds Issued After 1989 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets 8960 Net Investment Income Tax—Individuals, Estates, and Trusts See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Free online state and federal tax filing General Information A few items of general interest are covered here. Free online state and federal tax filing Recordkeeping. Free online state and federal tax filing You should keep a list showing sources and investment income amounts you receive during the year. Free online state and federal tax filing Also keep the forms you receive showing your investment income (Forms 1099-INT, Interest Income, and 1099-DIV, Dividends and Distributions, for example) as an important part of your records. Free online state and federal tax filing Net investment income tax (NIIT). Free online state and federal tax filing   Beginning in 2013, you may be subject to the NIIT. Free online state and federal tax filing The NIIT is a 3. Free online state and federal tax filing 8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status. Free online state and federal tax filing    Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying Widow(er) with dependent child $250,000    For more information, see Form 8960 and Instructions for Form 8960. Free online state and federal tax filing Tax on unearned income of certain children. Free online state and federal tax filing   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Free online state and federal tax filing This may happen if all of the following are true. Free online state and federal tax filing The child had more than $2,000 of unearned income. Free online state and federal tax filing The child is required to file a tax return. Free online state and federal tax filing The child was: Under age 18 at the end of 2013, Age 18 at the end of 2013 and did not have earned income that was more than half of the child's support, or A full-time student over age 18 and under age 24 at the end of 2013 and did not have earned income that was more than half of the child's support. Free online state and federal tax filing At least one of the child's parents was alive at the end of 2013. Free online state and federal tax filing The child does not file a joint return for 2013. Free online state and federal tax filing A child born on January 1, 1996, is considered to be age 18 at the end of 2013; a child born on January 1, 1995, is considered to be age 19 at the end of 2013; a child born on January 1, 1990, is considered to be age 24 at the end of 2013. Free online state and federal tax filing   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Free online state and federal tax filing If any of these statements is not true, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Free online state and federal tax filing    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Free online state and federal tax filing Use Form 8814 for this purpose. Free online state and federal tax filing   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Free online state and federal tax filing Beneficiary of an estate or trust. Free online state and federal tax filing   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Free online state and federal tax filing You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Free online state and federal tax filing , from the fiduciary. Free online state and federal tax filing Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Free online state and federal tax filing Social security number (SSN). Free online state and federal tax filing   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Free online state and federal tax filing This includes payers of interest and dividends. Free online state and federal tax filing If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Free online state and federal tax filing SSN for joint account. Free online state and federal tax filing   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Free online state and federal tax filing (For information on who owns the funds in a joint account, see Joint accounts , later. Free online state and federal tax filing ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Free online state and federal tax filing This is because only one name and SSN can be shown on Form 1099. Free online state and federal tax filing   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Free online state and federal tax filing For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Free online state and federal tax filing Custodian account for your child. Free online state and federal tax filing   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Free online state and federal tax filing For example, you must give your child's SSN to the payer of dividends on stock owned by your child, even though the dividends are paid to you as custodian. Free online state and federal tax filing Penalty for failure to supply SSN. Free online state and federal tax filing   You will be subject to a penalty if, when required, you fail to: Include your SSN on any return, statement, or other document, Give your SSN to another person who must include it on any return, statement, or other document, or Include the SSN of another person on any return, statement, or other document. Free online state and federal tax filing The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Free online state and federal tax filing   You will not be subject to this penalty if you can show that your failure to provide the SSN was due to reasonable cause and not to willful neglect. Free online state and federal tax filing   If you fail to supply an SSN, you may also be subject to backup withholding. Free online state and federal tax filing Backup withholding. Free online state and federal tax filing   Your investment income is generally not subject to regular withholding. Free online state and federal tax filing However, it may be subject to backup withholding to ensure that income tax is collected on the income. Free online state and federal tax filing Under backup withholding, the bank, broker, or other payer of interest, original issue discount (OID), dividends, cash patronage dividends, or royalties must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Free online state and federal tax filing   Backup withholding applies if: You do not give the payer your identification number (either a social security number or an employer identification number) in the required manner, The IRS notifies the payer that you gave an incorrect identification number, The IRS notifies the payer that you are subject to backup withholding on interest or dividends because you have underreported interest or dividends on your income tax return, or You are required, but fail, to certify that you are not subject to backup withholding for the reason described in (3). Free online state and federal tax filing Certification. Free online state and federal tax filing   For new accounts paying interest or dividends, you must certify under penalties of perjury that your SSN is correct and that you are not subject to backup withholding. Free online state and federal tax filing Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Free online state and federal tax filing If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Free online state and federal tax filing Underreported interest and dividends. Free online state and federal tax filing   You will be considered to have underreported your interest and dividends if the IRS has determined for a tax year that: You failed to include any part of a reportable interest or dividend payment required to be shown on your return, or You were required to file a return and to include a reportable interest or dividend payment on that return, but you failed to file the return. Free online state and federal tax filing How to stop backup withholding due to underreporting. Free online state and federal tax filing   If you have been notified that you underreported interest or dividends, you can request a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Free online state and federal tax filing You must show that at least one of the following situations applies. Free online state and federal tax filing No underreporting occurred. Free online state and federal tax filing You have a bona fide dispute with the IRS about whether underreporting occurred. Free online state and federal tax filing Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Free online state and federal tax filing You have corrected the underreporting by filing a return if you did not previously file one and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments. Free online state and federal tax filing   If the IRS determines that backup withholding should stop, it will provide you with a certification and will notify the payers who were sent notices earlier. Free online state and federal tax filing How to stop backup withholding due to an incorrect identification number. Free online state and federal tax filing   If you have been notified by a payer that you are subject to backup withholding because you have provided an incorrect SSN or employer identification number, you can stop it by following the instructions the payer gives you. Free online state and federal tax filing Reporting backup withholding. Free online state and federal tax filing   If backup withholding is deducted from your interest or dividend income or other reportable payment, the bank or other business must give you an information return for the year (for example, a Form 1099-INT) indicating the amount withheld. Free online state and federal tax filing The information return will show any backup withholding as “Federal income tax withheld. Free online state and federal tax filing ” Nonresident aliens. Free online state and federal tax filing    Generally, payments made to nonresident aliens are not subject to backup withholding. Free online state and federal tax filing You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Free online state and federal tax filing However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Free online state and federal tax filing For information on the 30% rate, see Publication 519, U. Free online state and federal tax filing S. Free online state and federal tax filing Tax Guide for Aliens. Free online state and federal tax filing Penalties. Free online state and federal tax filing   There are civil and criminal penalties for giving false information to avoid backup withholding. Free online state and federal tax filing The civil penalty is $500. Free online state and federal tax filing The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Free online state and federal tax filing Where to report investment income. Free online state and federal tax filing   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Free online state and federal tax filing But see the rest of this publication for detailed information about reporting investment income. Free online state and federal tax filing Joint accounts. Free online state and federal tax filing   If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law. Free online state and federal tax filing Community property states. Free online state and federal tax filing   If you are married and receive a distribution that is community income, one-half of the distribution is generally considered to be received by each spouse. Free online state and federal tax filing If you file separate returns, you must each report one-half of any taxable distribution. Free online state and federal tax filing See Publication 555, Community Property, for more information on community income. Free online state and federal tax filing   If the distribution is not considered community property and you and your spouse file separate returns, each of you must report your separate taxable distributions. Free online state and federal tax filing Example. Free online state and federal tax filing You and your spouse have a joint money market account. Free online state and federal tax filing Under state law, half the income from the account belongs to you, and half belongs to your spouse. Free online state and federal tax filing If you file separate returns, you each report half the income. Free online state and federal tax filing Income from property given to a child. Free online state and federal tax filing   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Free online state and federal tax filing   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Free online state and federal tax filing Savings account with parent as trustee. Free online state and federal tax filing   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Free online state and federal tax filing The savings account legally belongs to the child. Free online state and federal tax filing The parents are not legally permitted to use any of the funds to support the child. Free online state and federal tax filing Table 1-1. Free online state and federal tax filing Where To Report Common Types of Investment Income (For detailed information about reporting investment income, see the rest of this publication, especially How To Report Interest Income and How To Report Dividend Income in chapter 1. Free online state and federal tax filing ) Type of Income If you file Form 1040, report on . Free online state and federal tax filing . Free online state and federal tax filing . Free online state and federal tax filing If you can file Form 1040A, report on . Free online state and federal tax filing . Free online state and federal tax filing . Free online state and federal tax filing If you can file Form 1040EZ, report on . Free online state and federal tax filing . Free online state and federal tax filing . Free online state and federal tax filing Tax-exempt interest (Form 1099-INT, box 8) Line 8b Line 8b Space to the left of line 2 (enter “TEI” and the amount) Taxable interest that totals $1,500 or less Line 8a (You may need to file Schedule B as well. Free online state and federal tax filing ) Line 8a (You may need to file Schedule B as well. Free online state and federal tax filing ) Line 2 Taxable interest that totals more than $1,500 Line 8a; also use Schedule B, line 1 Line 8a; also use Schedule B, line 1   Savings bond interest you will exclude because of higher education expenses Schedule B; also use Form 8815 Schedule B; also use Form 8815   Ordinary dividends that total $1,500 or less Line 9a (You may need to file Schedule B as well. Free online state and federal tax filing ) Line 9a (You may need to file Schedule B as well. Free online state and federal tax filing )   Ordinary dividends that total more than $1,500 Line 9a; also use Schedule B, line 5 Line 9a; also use Schedule B, line 5   Qualified dividends (if you do not have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2 Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2   Qualified dividends (if you have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, line 2 You cannot use Form 1040A    You cannot use Form 1040EZ Capital gain distributions (if you do not have to file Schedule D) Line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3 Line 10; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3   Capital gain distributions (if you have to file Schedule D) Schedule D, line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     Section 1250, 1202, or collectibles gain (Form 1099-DIV, box 2b, 2c, or 2d) Form 8949 and Schedule D     Nondividend distributions (Form 1099-DIV, box 3) Generally not reported*     Undistributed capital gains (Form 2439, boxes 1a - 1d) Schedule D     Gain or loss from sales of stocks or bonds Line 13; also use Form 8949, Schedule D, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet You cannot use Form 1040A   Gain or loss from exchanges of like-kind investment property Line 13; also use Schedule D, Form 8824, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     *Report any amounts in excess of your basis in your mutual fund shares on Form 8949. Free online state and federal tax filing Use Part II if you held the shares more than 1 year. Free online state and federal tax filing Use Part I if you held your mutual fund shares 1 year or less. Free online state and federal tax filing For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Free online state and federal tax filing Accuracy-related penalty. Free online state and federal tax filing   An accuracy-related penalty of 20% can be charged for underpayments of tax due to negligence or disregard of rules or regulations or substantial understatement of tax. Free online state and federal tax filing For information on the penalty and any interest that applies, see Penalties in chapter 2. Free online state and federal tax filing Interest Income This section discusses the tax treatment of different types of interest income. Free online state and federal tax filing In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Free online state and federal tax filing (It does not have to be entered in your passbook. Free online state and federal tax filing ) Exceptions to this rule are discussed later. Free online state and federal tax filing Form 1099-INT. Free online state and federal tax filing   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Free online state and federal tax filing This form shows you the interest you received during the year. Free online state and federal tax filing Keep this form for your records. Free online state and federal tax filing You do not have to attach it to your tax return. Free online state and federal tax filing   Report on your tax return the total interest income you receive for the tax year. Free online state and federal tax filing Interest not reported on Form 1099-INT. Free online state and federal tax filing   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Free online state and federal tax filing For example, you may receive distributive shares of interest from partnerships or S corporations. Free online state and federal tax filing This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Free online state and federal tax filing , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Free online state and federal tax filing Nominees. Free online state and federal tax filing   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Free online state and federal tax filing   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on Nominee distributions , later, under How To Report Interest Income. Free online state and federal tax filing Incorrect amount. Free online state and federal tax filing   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Free online state and federal tax filing The new Form 1099-INT you receive will be marked “Corrected. Free online state and federal tax filing ” Form 1099-OID. Free online state and federal tax filing   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Free online state and federal tax filing For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Free online state and federal tax filing Exempt-interest dividends. Free online state and federal tax filing   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Free online state and federal tax filing (However, see Information reporting requirement , next. Free online state and federal tax filing ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Free online state and federal tax filing You do not reduce your basis for distributions that are exempt-interest dividends. Free online state and federal tax filing Information reporting requirement. Free online state and federal tax filing   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Free online state and federal tax filing This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Free online state and federal tax filing See How To Report Interest Income , later. Free online state and federal tax filing Note. Free online state and federal tax filing Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Free online state and federal tax filing The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Free online state and federal tax filing See Form 6251 and its instructions for more information about this tax. Free online state and federal tax filing Private activity bonds are discussed later under State or Local Government Obligations. Free online state and federal tax filing Interest on VA dividends. Free online state and federal tax filing   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Free online state and federal tax filing This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Free online state and federal tax filing Individual retirement arrangements (IRAs). Free online state and federal tax filing   Interest on a Roth IRA generally is not taxable. Free online state and federal tax filing Interest on a traditional IRA is tax deferred. Free online state and federal tax filing You generally do not include it in your income until you make withdrawals from the IRA. Free online state and federal tax filing See Publication 590 for more information. Free online state and federal tax filing Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Free online state and federal tax filing The following are some sources of taxable interest. Free online state and federal tax filing Dividends that are actually interest. Free online state and federal tax filing   Certain distributions commonly called dividends are actually interest. Free online state and federal tax filing You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Free online state and federal tax filing  The “dividends” will be shown as interest income on Form 1099-INT. Free online state and federal tax filing Money market funds. Free online state and federal tax filing   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Free online state and federal tax filing Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Free online state and federal tax filing Certificates of deposit and other deferred interest accounts. Free online state and federal tax filing   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Free online state and federal tax filing You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Free online state and federal tax filing The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Free online state and federal tax filing If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Free online state and federal tax filing Interest subject to penalty for early withdrawal. Free online state and federal tax filing   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Free online state and federal tax filing You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Free online state and federal tax filing See Penalty on early withdrawal of savings under How To Report Interest Income, later, for more information on how to report the interest and deduct the penalty. Free online state and federal tax filing Money borrowed to invest in certificate of deposit. Free online state and federal tax filing   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Free online state and federal tax filing You must report the total interest you earn on the certificate in your income. Free online state and federal tax filing If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Free online state and federal tax filing See Interest Expenses in chapter 3. Free online state and federal tax filing Example. Free online state and federal tax filing You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Free online state and federal tax filing The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Free online state and federal tax filing The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Free online state and federal tax filing The bank also gives you a statement showing that you paid $310 interest for 2013. Free online state and federal tax filing You must include the $575 in your income. Free online state and federal tax filing If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Free online state and federal tax filing Gift for opening account. Free online state and federal tax filing   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Free online state and federal tax filing   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Free online state and federal tax filing For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Free online state and federal tax filing The value is determined by the cost to the financial institution. Free online state and federal tax filing Example. Free online state and federal tax filing You open a savings account at your local bank and deposit $800. Free online state and federal tax filing The account earns $20 interest. Free online state and federal tax filing You also receive a $15 calculator. Free online state and federal tax filing If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Free online state and federal tax filing You must report $35 interest income on your tax return. Free online state and federal tax filing Interest on insurance dividends. Free online state and federal tax filing   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Free online state and federal tax filing However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Free online state and federal tax filing Prepaid insurance premiums. Free online state and federal tax filing   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Free online state and federal tax filing U. Free online state and federal tax filing S. Free online state and federal tax filing obligations. Free online state and federal tax filing   Interest on U. Free online state and federal tax filing S. Free online state and federal tax filing obligations, such as U. Free online state and federal tax filing S. Free online state and federal tax filing Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Free online state and federal tax filing Interest on tax refunds. Free online state and federal tax filing   Interest you receive on tax refunds is taxable income. Free online state and federal tax filing Interest on condemnation award. Free online state and federal tax filing   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Free online state and federal tax filing Installment sale payments. Free online state and federal tax filing   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Free online state and federal tax filing That interest is taxable when you receive it. Free online state and federal tax filing If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Free online state and federal tax filing See Unstated Interest and Original Issue Discount (OID) in Publication 537. Free online state and federal tax filing Interest on annuity contract. Free online state and federal tax filing   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Free online state and federal tax filing Usurious interest. Free online state and federal tax filing   Usurious interest is interest charged at an illegal rate. Free online state and federal tax filing This is taxable as interest unless state law automatically changes it to a payment on the principal. Free online state and federal tax filing Interest income on frozen deposits. Free online state and federal tax filing   Exclude from your gross income interest on frozen deposits. Free online state and federal tax filing A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state in which the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Free online state and federal tax filing   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Free online state and federal tax filing If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income for information about reporting this interest income exclusion on your tax return. Free online state and federal tax filing   The interest you exclude is treated as credited to your account in the following year. Free online state and federal tax filing You must include it in income in the year you can withdraw it. Free online state and federal tax filing Example. Free online state and federal tax filing $100 of interest was credited on your frozen deposit during the year. Free online state and federal tax filing You withdrew $80 but could not withdraw any more as of the end of the year. Free online state and federal tax filing You must include $80 in your income and exclude $20 from your income for the year. Free online state and federal tax filing You must include the $20 in your income for the year you can withdraw it. Free online state and federal tax filing Bonds traded flat. Free online state and federal tax filing    If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Free online state and federal tax filing The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Free online state and federal tax filing When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Free online state and federal tax filing Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Free online state and federal tax filing See Bonds Sold Between Interest Dates , later in this chapter. Free online state and federal tax filing Below-Market Loans If you make a below-market gift or demand loan, you must report as interest income any forgone interest (defined later) from that loan. Free online state and federal tax filing The below-market loan rules and exceptions are described in this section. Free online state and federal tax filing For more information, see section 7872 of the Internal Revenue Code and its regulations. Free online state and federal tax filing If you receive a below-market loan, you may be able to deduct the forgone interest as well as any interest you actually paid, but not if it is personal interest. Free online state and federal tax filing Loans subject to the rules. Free online state and federal tax filing   The rules for below-market loans apply to: Gift loans, Pay-related loans, Corporation-shareholder loans, Tax avoidance loans, and Certain loans made to qualified continuing care facilities under a continuing care contract. Free online state and federal tax filing A pay-related loan is any below-market loan between an employer and an employee or between an independent contractor and a person for whom the contractor provides services. Free online state and federal tax filing A tax avoidance loan is any below-market loan where the avoidance of federal tax is one of the main purposes of the interest arrangement. Free online state and federal tax filing Forgone interest. Free online state and federal tax filing   For any period, forgone interest is: The amount of interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Free online state and federal tax filing Applicable federal rate. Free online state and federal tax filing   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Free online state and federal tax filing Some IRS offices have these bulletins available for research. Free online state and federal tax filing See chapter 5, How To Get Tax Help , for other ways to get this information. Free online state and federal tax filing Rules for below-market loans. Free online state and federal tax filing   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Free online state and federal tax filing Gift and demand loans. Free online state and federal tax filing   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Free online state and federal tax filing   A demand loan is a loan payable in full at any time upon demand by the lender. Free online state and federal tax filing A demand loan is a below-market loan if no interest is charged or if interest is charged at a rate below the applicable federal rate. Free online state and federal tax filing   A demand loan or gift loan that is a below-market loan is generally treated as an arm's-length transaction in which the lender is treated as having made: A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate, and An additional payment to the borrower in an amount equal to the forgone interest. Free online state and federal tax filing The borrower is generally treated as transferring the additional payment back to the lender as interest. Free online state and federal tax filing The lender must report that amount as interest income. Free online state and federal tax filing   The lender's additional payment to the borrower is treated as a gift, dividend, contribution to capital, pay for services, or other payment, depending on the substance of the transaction. Free online state and federal tax filing The borrower may have to report this payment as taxable income, depending on its classification. Free online state and federal tax filing These transfers are considered to occur annually, generally on December 31. Free online state and federal tax filing Term loans. Free online state and federal tax filing   A term loan is any loan that is not a demand loan. Free online state and federal tax filing A term loan is a below-market loan if the amount of the loan is more than the present value of all payments due under the loan. Free online state and federal tax filing   A lender who makes a below-market term loan other than a gift loan is treated as transferring an additional lump-sum cash payment to the borrower (as a dividend, contribution to capital, etc. Free online state and federal tax filing ) on the date the loan is made. Free online state and federal tax filing The amount of this payment is the amount of the loan minus the present value, at the applicable federal rate, of all payments due under the loan. Free online state and federal tax filing An equal amount is treated as original issue discount (OID). Free online state and federal tax filing The lender must report the annual part of the OID as interest income. Free online state and federal tax filing The borrower may be able to deduct the OID as interest expense. Free online state and federal tax filing See Original Issue Discount (OID) , later. Free online state and federal tax filing Exceptions to the below-market loan rules. Free online state and federal tax filing   Exceptions to the below-market loan rules are discussed here. Free online state and federal tax filing Exception for loans of $10,000 or less. Free online state and federal tax filing   The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. Free online state and federal tax filing This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. Free online state and federal tax filing This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Free online state and federal tax filing Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Free online state and federal tax filing Exception for loans to continuing care facilities. Free online state and federal tax filing   Loans to qualified continuing care facilities under continuing care contracts are not subject to the rules for below-market loans for the calendar year if the lender or the lender's spouse is age 62 or older at the end of the year. Free online state and federal tax filing For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Free online state and federal tax filing Exception for loans without significant tax effect. Free online state and federal tax filing   Loans are excluded from the below-market loan rules if their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Free online state and federal tax filing These loans include: Loans made available by the lender to the general public on the same terms and conditions that are consistent with the lender's customary business practice; Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public; Certain employee-relocation loans; Certain loans from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Free online state and federal tax filing S. Free online state and federal tax filing trade or business and would not be exempt from U. Free online state and federal tax filing S. Free online state and federal tax filing tax under an income tax treaty; Gift loans to a charitable organization, contributions to which are deductible, if the total outstanding amount of loans between the organization and lender is $250,000 or less at all times during the tax year; and Other loans on which the interest arrangement can be shown to have no significant effect on the federal tax liability of the lender or the borrower. Free online state and federal tax filing For a loan described in (6) above, all the facts and circumstances are used to determine if the interest arrangement has a significant effect on the federal tax liability of the lender or borrower. Free online state and federal tax filing Some factors to be considered are: Whether items of income and deduction generated by the loan offset each other; The amount of these items; The cost to you of complying with the below-market loan rules, if they were to apply; and Any reasons other than taxes for structuring the transaction as a below-market loan. Free online state and federal tax filing If you structure a transaction to meet this exception and one of the principal purposes of that structure is the avoidance of federal tax, the loan will be considered a tax-avoidance loan, and this exception will not apply. Free online state and federal tax filing Limit on forgone interest for gift loans of $100,000 or less. Free online state and federal tax filing   For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. Free online state and federal tax filing If the borrower's net investment income is $1,000 or less, it is treated as zero. Free online state and federal tax filing This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Free online state and federal tax filing Effective dates. Free online state and federal tax filing    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Free online state and federal tax filing U. Free online state and federal tax filing S. Free online state and federal tax filing Savings Bonds This section provides tax information on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds. Free online state and federal tax filing It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Free online state and federal tax filing U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Free online state and federal tax filing For other information on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Free online state and federal tax filing O. Free online state and federal tax filing Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Free online state and federal tax filing O. Free online state and federal tax filing Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Free online state and federal tax filing O. Free online state and federal tax filing Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Free online state and federal tax filing treasurydirect. Free online state and federal tax filing gov/indiv/indiv. Free online state and federal tax filing htm. Free online state and federal tax filing Accrual method taxpayers. Free online state and federal tax filing   If you use an accrual method of accounting, you must report interest on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds each year as it accrues. Free online state and federal tax filing You cannot postpone reporting interest until you receive it or until the bonds mature. Free online state and federal tax filing Cash method taxpayers. Free online state and federal tax filing   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds when you receive it. Free online state and federal tax filing But see Reporting options for cash method taxpayers , later. Free online state and federal tax filing Series HH bonds. Free online state and federal tax filing   These bonds were issued at face value. Free online state and federal tax filing Interest is paid twice a year by direct deposit to your bank account. Free online state and federal tax filing If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Free online state and federal tax filing   Series HH bonds were first offered in 1980 and last offered in August 2004. Free online state and federal tax filing Before 1980, series H bonds were issued. Free online state and federal tax filing Series H bonds are treated the same as series HH bonds. Free online state and federal tax filing If you are a cash method taxpayer, you must report the interest when you receive it. Free online state and federal tax filing   Series H bonds have a maturity period of 30 years. Free online state and federal tax filing Series HH bonds mature in 20 years. Free online state and federal tax filing The last series H bonds matured in 2009. Free online state and federal tax filing The last series HH bonds will mature in 2024. Free online state and federal tax filing Series EE and series I bonds. Free online state and federal tax filing   Interest on these bonds is payable when you redeem the bonds. Free online state and federal tax filing The difference between the purchase price and the redemption value is taxable interest. Free online state and federal tax filing Series EE bonds. Free online state and federal tax filing   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Free online state and federal tax filing Before July 1980, series E bonds were issued. Free online state and federal tax filing The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Free online state and federal tax filing Paper series EE and series E bonds are issued at a discount. Free online state and federal tax filing The face value is payable to you at maturity. Free online state and federal tax filing Electronic series EE bonds are issued at their face value. Free online state and federal tax filing The face value plus accrued interest is payable to you at maturity. Free online state and federal tax filing As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Free online state and federal tax filing    Owners of paper series EE bonds can convert them to electronic bonds. Free online state and federal tax filing These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Free online state and federal tax filing Series I bonds. Free online state and federal tax filing   Series I bonds were first offered in 1998. Free online state and federal tax filing These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Free online state and federal tax filing The face value plus all accrued interest is payable to you at maturity. Free online state and federal tax filing Reporting options for cash method taxpayers. Free online state and federal tax filing   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Free online state and federal tax filing Method 1. Free online state and federal tax filing Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Free online state and federal tax filing (However, see Savings bonds traded , later. Free online state and federal tax filing )  Note. Free online state and federal tax filing Series EE bonds issued in 1983 matured in 2013. Free online state and federal tax filing If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Free online state and federal tax filing The last series E bonds were issued in 1980 and matured in 2010. Free online state and federal tax filing If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Free online state and federal tax filing Method 2. Free online state and federal tax filing Choose to report the increase in redemption value as interest each year. Free online state and federal tax filing  You must use the same method for all series EE, series E, and series I bonds you own. Free online state and federal tax filing If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Free online state and federal tax filing If you plan to cash your bonds in the same year you will pay for higher educational expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Free online state and federal tax filing To learn how, see Education Savings Bond Program, later. Free online state and federal tax filing Change from method 1. Free online state and federal tax filing   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Free online state and federal tax filing In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Free online state and federal tax filing   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Free online state and federal tax filing Change from method 2. Free online state and federal tax filing   To change from method 2 to method 1, you must request permission from the IRS. Free online state and federal tax filing Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Free online state and federal tax filing You have typed or printed the following number at the top: “131. Free online state and federal tax filing ” It includes your name and social security number under “131. Free online state and federal tax filing ” It includes the year of change (both the beginning and ending dates). Free online state and federal tax filing It identifies the savings bonds for which you are requesting this change. Free online state and federal tax filing It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Free online state and federal tax filing   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Free online state and federal tax filing   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Free online state and federal tax filing On the statement, type or print “Filed pursuant to section 301. Free online state and federal tax filing 9100-2. Free online state and federal tax filing ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Free online state and federal tax filing    By the date you file the original statement with your return, you must also send a signed copy to the address below. Free online state and federal tax filing    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Free online state and federal tax filing O. Free online state and federal tax filing Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Free online state and federal tax filing Internal Revenue Service Attention: CC:IT&A  (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW Washington, DC 20224    Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115. Free online state and federal tax filing In that case, follow the form instructions for an automatic change. Free online state and federal tax filing No user fee is required. Free online state and federal tax filing Co-owners. Free online state and federal tax filing   If a U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Free online state and federal tax filing One co-owner's funds used. Free online state and federal tax filing   If you used your funds to buy the bond, you must pay the tax on the interest. Free online state and federal tax filing This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Free online state and federal tax filing Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Free online state and federal tax filing The co-owner who redeemed the bond is a “nominee. Free online state and federal tax filing ” See Nominee distributions under How To Report Interest Income, later, for more information about how a person who is a nominee reports interest income belonging to another person. Free online state and federal tax filing Both co-owners' funds used. Free online state and federal tax filing   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Free online state and federal tax filing Community property. Free online state and federal tax filing   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Free online state and federal tax filing If you file separate returns, each of you generally must report one-half of the bond interest. Free online state and federal tax filing For more information about community property, see Publication 555. Free online state and federal tax filing Table 1-2. Free online state and federal tax filing   These rules are also shown in Table 1-2. Free online state and federal tax filing Child as only owner. Free online state and federal tax filing   Interest on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds bought for and registered only in the name of your child is income to your child, even if you paid for the bonds and are named as beneficiary. Free online state and federal tax filing If the bonds are series EE, series E, or series I bonds, the interest on the bonds is income to your child in the earlier of the year the bonds are cashed or disposed of or the year the bonds mature, unless your child chooses to report the interest income each year. Free online state and federal tax filing Choice to report interest each year. Free online state and federal tax filing   The choice to report the accrued interest each year can be made either by your child or by you for your child. Free online state and federal tax filing This choice is made by filing an income tax return that shows all the interest earned to date, and by stating on the return that your child chooses to report the interest each year. Free online state and federal tax filing Either you or your child should keep a copy of this return. Free online state and federal tax filing   Unless your child is otherwise required to file a tax return for any year after making this choice, your child does not have to file a return only to report the annual accrual of U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond interest under this choice. Free online state and federal tax filing However, see Tax on unearned income of certain children , earlier, under General Information. Free online state and federal tax filing Neither you nor your child can change the way you report the interest unless you request permission from the IRS, as discussed earlier under Change from method 2 . Free online state and federal tax filing Ownership transferred. Free online state and federal tax filing   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Free online state and federal tax filing But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Free online state and federal tax filing   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Free online state and federal tax filing Example. Free online state and federal tax filing You bought series EE bonds entirely with your own funds. Free online state and federal tax filing You did not choose to report the accrued interest each year. Free online state and federal tax filing Later, you transfer the bonds to your former spouse under a divorce agreement. Free online state and federal tax filing You must include the deferred accrued interest, from the date of the original issue of the bonds to the date of transfer, in your income in the year of transfer. Free online state and federal tax filing Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Free online state and federal tax filing Table 1-2. Free online state and federal tax filing Who Pays the Tax on U. Free online state and federal tax filing S. Free online state and federal tax filing Savings Bond Interest IF . Free online state and federal tax filing . Free online state and federal tax filing . Free online state and federal tax filing THEN the interest must be reported by . Free online state and federal tax filing . Free online state and federal tax filing . Free online state and federal tax filing you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Free online state and federal tax filing you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Free online state and federal tax filing you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Free online state and federal tax filing you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Free online state and federal tax filing If you file separate returns, both you and your spouse generally report one-half of the interest. Free online state and federal tax filing Purchased jointly. Free online state and federal tax filing   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Free online state and federal tax filing The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Free online state and federal tax filing This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Free online state and federal tax filing   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Free online state and federal tax filing But the new co-owner will report only his or her share of the interest earned after the transfer. Free online state and federal tax filing   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Free online state and federal tax filing Example 1. Free online state and federal tax filing You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Free online state and federal tax filing The bond was issued to you and your spouse as co-owners. Free online state and federal tax filing You both postpone reporting interest on the bond. Free online state and federal tax filing You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free online state and federal tax filing At that time neither you nor your spouse has to report the interest earned to the date of reissue. Free online state and federal tax filing Example 2. Free online state and federal tax filing You bought a $1,000 series EE savings bond entirely with your own funds. Free online state and federal tax filing The bond was issued to you and your spouse as co-owners. Free online state and federal tax filing You both postponed reporting interest on the bond. Free online state and federal tax filing You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free online state and federal tax filing You must report half the interest earned to the date of reissue. Free online state and federal tax filing Transfer to a trust. Free online state and federal tax filing   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Free online state and federal tax filing However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Free online state and federal tax filing You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Free online state and federal tax filing   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Free online state and federal tax filing See Savings bonds traded , later. Free online state and federal tax filing Decedents. Free online state and federal tax filing   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Free online state and federal tax filing Decedent who reported interest each year. Free online state and federal tax filing   If the bonds transferred because of death were owned by a person who used an accrual method, or who used the cash method and had chosen to report the interest each year, the interest earned in the year of death up to the date of death must be reported on that person's final return. Free online state and federal tax filing The person who acquires the bonds includes in income only interest earned after the date of death. Free online state and federal tax filing Decedent who postponed reporting interest. Free online state and federal tax filing   If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways. Free online state and federal tax filing The surviving spouse or personal representative (executor, administrator, etc. Free online state and federal tax filing ) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. Free online state and federal tax filing The person who acquires the bonds then includes in income only interest earned after the date of death. Free online state and federal tax filing If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. Free online state and federal tax filing All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. Free online state and federal tax filing If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. Free online state and federal tax filing In the year that person reports the interest, he or she can claim a deduction for any federal estate tax paid on the part of the interest included in the decedent's estate. Free online state and federal tax filing For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Free online state and federal tax filing Example 1. Free online state and federal tax filing Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Free online state and federal tax filing He had bought the bond for $500 and had not chosen to report the interest each year. Free online state and federal tax filing At the date of death, interest of $200 had accrued on the bond, and its value of $700 was included in your uncle's estate. Free online state and federal tax filing Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Free online state and federal tax filing The $200 is income in respect of the decedent. Free online state and federal tax filing You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Free online state and federal tax filing If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. Free online state and federal tax filing For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate. Free online state and federal tax filing Example 2. Free online state and federal tax filing If, in Example 1 , the executor had chosen to include the $200 accrued interest in your uncle's final return, you would report only $300 as interest when you cashed the bond at maturity. Free online state and federal tax filing $300 is the interest earned after your uncle's death. Free online state and federal tax filing Example 3. Free online state and federal tax filing If, in Example 1 , you make or have made the choice to report the increase in redemption value as interest each year, you include in gross income for the year you acquire the bond all of the unreported increase in value of all series E, series EE, and series I bonds you hold, including the $200 on the bond you inherited from your uncle. Free online state and federal tax filing Example 4. Free online state and federal tax filing When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Free online state and federal tax filing You were the beneficiary of these bonds. Free online state and federal tax filing Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Free online state and federal tax filing Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Free online state and federal tax filing The income in respect of the decedent is the sum of the unreported interest on the series EE bonds and the interest, if any, payable on the series HH bonds but not received as of the date of your aunt's death. Free online state and federal tax filing You must report any interest received during the year as income on your return. Free online state and federal tax filing The part of the interest payable but not received before your aunt's death is income in respect of the decedent and may qualify for the estate tax deduction. Free online state and federal tax filing For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Free online state and federal tax filing Savings bonds distributed from a retirement or profit-sharing plan. Free online state and federal tax filing   If you acquire a U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond in a taxable distribution from a retirement or profit-sharing plan, your income for the year of distribution includes the bond's redemption value (its cost plus the interest accrued before the distribution). Free online state and federal tax filing When you redeem the bond (whether in the year of distribution or later), your interest income includes only the interest accrued after the bond was distributed. Free online state and federal tax filing To figure the interest reported as a taxable distribution and your interest income when you redeem the bond, see Worksheet for savings bonds distributed from a retirement or profit-sharing plan under How To Report Interest Income, later. Free online state and federal tax filing Savings bonds traded. Free online state and federal tax filing   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Free online state and federal tax filing (You cannot trade series I bonds for series HH bonds. Free online state and federal tax filing After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Free online state and federal tax filing ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Free online state and federal tax filing When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Free online state and federal tax filing Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Free online state and federal tax filing Example. Free online state and federal tax filing You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Free online state and federal tax filing You reported the $223 as taxable income on your tax return. Free online state and federal tax filing At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Free online state and federal tax filing You hold the series HH bonds until maturity, when you receive $2,500. Free online state and federal tax filing You must report $300 as interest income in the year of maturity. Free online state and federal tax filing This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Free online state and federal tax filing (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Free online state and federal tax filing ) Choice to report interest in year of trade. Free online state and federal tax filing   You could have chosen to treat all of the previously unreported accrued interest on series EE or series E bonds traded for series HH bonds as income in the year of the trade. Free online state and federal tax filing If you made this choice, it is treated as a change from method 1. Free online state and federal tax filing See Change from method 1 under Series EE and series I bonds, earlier. Free online state and federal tax filing Form 1099-INT for U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond interest. Free online state and federal tax filing   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Free online state and federal tax filing Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Free online state and federal tax filing However, your Form 1099-INT may show more interest than you have to include on your income tax return. Free online state and federal tax filing For example, this may happen if any of the following are true. Free online state and federal tax filing You chose to report the increase in the redemption value of the bond each year. Free online state and federal tax filing The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Free online state and federal tax filing You received the bond from a decedent. Free online state and federal tax filing The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Free online state and federal tax filing Ownership of the bond was transferred. Free online state and federal tax filing The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Free online state and federal tax filing You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Free online state and federal tax filing The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Free online state and federal tax filing (See Co-owners , earlier in this section, for more information about the reporting requirements. Free online state and federal tax filing ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Free online state and federal tax filing The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Free online state and federal tax filing (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free online state and federal tax filing , for the year of distribution. Free online state and federal tax filing )   For more information on including the correct amount of interest on your return, see U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Free online state and federal tax filing    Interest on U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds is exempt from state and local taxes. Free online state and federal tax filing The Form 1099-INT you receive will indicate the amount that is for U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds interest in box 3. Free online state and federal tax filing Do not include this income on your state or local income tax return. Free online state and federal tax filing Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds during the year if you pay qualified higher educational expenses during the same year. Free online state and federal tax filing This exclusion is known as the Education Savings Bond Program. Free online state and federal tax filing You do not qualify for this exclusion if your filing status is married filing separately. Free online state and federal tax filing Form 8815. Free online state and federal tax filing   Use Form 8815 to figure your exclusion. Free online state and federal tax filing Attach the form to your Form 1040 or Form 1040A. Free online state and federal tax filing Qualified U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds. Free online state and federal tax filing   A qualified U. Free online state and federal tax filing S. Free online state and federal tax filing savings bond is a series EE bond issued after 1989 or a series I bond. Free online state and federal tax filing The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Free online state and federal tax filing You must be at least 24 years old before the bond's issue date. Free online state and federal tax filing For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Free online state and federal tax filing    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Free online state and federal tax filing Beneficiary. Free online state and federal tax filing   You can designate any individual (including a child) as a beneficiary of the bond. Free online state and federal tax filing Verification by IRS. Free online state and federal tax filing   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Free online state and federal tax filing Qualified expenses. Free online state and federal tax filing   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Free online state and federal tax filing   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Free online state and federal tax filing For information about these programs, see Publication 970, Tax Benefits for Education. Free online state and federal tax filing   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Free online state and federal tax filing Eligible educational institutions. Free online state and federal tax filing   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the Department of Education. Free online state and federal tax filing Reduction for certain benefits. Free online state and federal tax filing   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Free online state and federal tax filing Tax-free part of scholarships and fellowships. Free online state and federal tax filing Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Free online state and federal tax filing Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Free online state and federal tax filing Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Free online state and federal tax filing Any expense used in figuring the American Opportunity and lifetime learning credits. Free online state and federal tax filing For information about these benefits, see Publication 970. Free online state and federal tax filing Amount excludable. Free online state and federal tax filing   If the total proceeds (interest and principal) from the qualified U. Free online state and federal tax filing S. Free online state and federal tax filing savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Free online state and federal tax filing If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Free online state and federal tax filing   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Free online state and federal tax filing The numer