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How Do I Amend My Tax Return Online

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How Do I Amend My Tax Return Online

How do i amend my tax return online Publication 936 - Main Content Table of Contents Part I. How do i amend my tax return online Home Mortgage InterestSecured Debt Qualified Home Special Situations Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement How To Report Special Rule for Tenant-Stockholders in Cooperative Housing Corporations Part II. How do i amend my tax return online Limits on Home Mortgage Interest DeductionHome Acquisition Debt Home Equity Debt Grandfathered Debt Table 1 Instructions How To Get Tax HelpLow Income Taxpayer Clinics Part I. How do i amend my tax return online Home Mortgage Interest This part explains what you can deduct as home mortgage interest. How do i amend my tax return online It includes discussions on points, mortgage insurance premiums, and how to report deductible interest on your tax return. How do i amend my tax return online Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). How do i amend my tax return online The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. How do i amend my tax return online You can deduct home mortgage interest if all the following conditions are met. How do i amend my tax return online You file Form 1040 and itemize deductions on Schedule A (Form 1040). How do i amend my tax return online The mortgage is a secured debt on a qualified home in which you have an ownership interest. How do i amend my tax return online Secured Debt and Qualified Home are explained later. How do i amend my tax return online  Both you and the lender must intend that the loan be repaid. How do i amend my tax return online Fully deductible interest. How do i amend my tax return online   In most cases, you can deduct all of your home mortgage interest. How do i amend my tax return online How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. How do i amend my tax return online   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. How do i amend my tax return online (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. How do i amend my tax return online ) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct. How do i amend my tax return online   The three categories are as follows. How do i amend my tax return online Mortgages you took out on or before October 13, 1987 (called grandfathered debt). How do i amend my tax return online Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). How do i amend my tax return online Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). How do i amend my tax return online The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. How do i amend my tax return online   See Part II for more detailed definitions of grandfathered, home acquisition, and home equity debt. How do i amend my tax return online    You can use Figure A to check whether your home mortgage interest is fully deductible. How do i amend my tax return online This image is too large to be displayed in the current screen. How do i amend my tax return online Please click the link to view the image. How do i amend my tax return online Figure A. How do i amend my tax return online Is My Home Mortgage Interest Fully Deductible? Secured Debt You can deduct your home mortgage interest only if your mortgage is a secured debt. How do i amend my tax return online A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, that your home could satisfy the debt, and Is recorded or is otherwise perfected under any state or local law that applies. How do i amend my tax return online In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. How do i amend my tax return online If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. How do i amend my tax return online In this publication, mortgage will refer to secured debt. How do i amend my tax return online Debt not secured by home. How do i amend my tax return online   A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). How do i amend my tax return online   A debt is not secured by your home if it once was, but is no longer secured by your home. How do i amend my tax return online Wraparound mortgage. How do i amend my tax return online   This is not a secured debt unless it is recorded or otherwise perfected under state law. How do i amend my tax return online Example. How do i amend my tax return online Beth owns a home subject to a mortgage of $40,000. How do i amend my tax return online She sells the home for $100,000 to John, who takes it subject to the $40,000 mortgage. How do i amend my tax return online Beth continues to make the payments on the $40,000 note. How do i amend my tax return online John pays $10,000 down and gives Beth a $90,000 note secured by a wraparound mortgage on the home. How do i amend my tax return online Beth does not record or otherwise perfect the $90,000 mortgage under the state law that applies. How do i amend my tax return online Therefore, the mortgage is not a secured debt and John cannot deduct any of the interest he pays on it as home mortgage interest. How do i amend my tax return online Choice to treat the debt as not secured by your home. How do i amend my tax return online   You can choose to treat any debt secured by your qualified home as not secured by the home. How do i amend my tax return online This treatment begins with the tax year for which you make the choice and continues for all later tax years. How do i amend my tax return online You can revoke your choice only with the consent of the Internal Revenue Service (IRS). How do i amend my tax return online   You may want to treat a debt as not secured by your home if the interest on that debt is fully deductible (for example, as a business expense) whether or not it qualifies as home mortgage interest. How do i amend my tax return online This may allow you, if the limits in Part II apply, more of a deduction for interest on other debts that are deductible only as home mortgage interest. How do i amend my tax return online Cooperative apartment owner. How do i amend my tax return online   If you own stock in a cooperative housing corporation, see the Special Rule for Tenant-Stockholders in Cooperative Housing Corporations , near the end of this Part I. How do i amend my tax return online Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. How do i amend my tax return online This means your main home or your second home. How do i amend my tax return online A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. How do i amend my tax return online The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. How do i amend my tax return online Otherwise, it is considered personal interest and is not deductible. How do i amend my tax return online Main home. How do i amend my tax return online   You can have only one main home at any one time. How do i amend my tax return online This is the home where you ordinarily live most of the time. How do i amend my tax return online Second home. How do i amend my tax return online   A second home is a home that you choose to treat as your second home. How do i amend my tax return online Second home not rented out. How do i amend my tax return online   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. How do i amend my tax return online You do not have to use the home during the year. How do i amend my tax return online Second home rented out. How do i amend my tax return online   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. How do i amend my tax return online You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. How do i amend my tax return online If you do not use the home long enough, it is considered rental property and not a second home. How do i amend my tax return online For information on residential rental property, see Publication 527. How do i amend my tax return online More than one second home. How do i amend my tax return online   If you have more than one second home, you can treat only one as the qualified second home during any year. How do i amend my tax return online However, you can change the home you treat as a second home during the year in the following situations. How do i amend my tax return online If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it. How do i amend my tax return online If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home. How do i amend my tax return online If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home. How do i amend my tax return online Divided use of your home. How do i amend my tax return online   The only part of your home that is considered a qualified home is the part you use for residential living. How do i amend my tax return online If you use part of your home for other than residential living, such as a home office, you must allocate the use of your home. How do i amend my tax return online You must then divide both the cost and fair market value of your home between the part that is a qualified home and the part that is not. How do i amend my tax return online Dividing the cost may affect the amount of your home acquisition debt, which is limited to the cost of your home plus the cost of any improvements. How do i amend my tax return online (See Home Acquisition Debt in Part II. How do i amend my tax return online ) Dividing the fair market value may affect your home equity debt limit, also explained in Part II . How do i amend my tax return online Renting out part of home. How do i amend my tax return online   If you rent out part of a qualified home to another person (tenant), you can treat the rented part as being used by you for residential living only if all of the following conditions apply. How do i amend my tax return online The rented part of your home is used by the tenant primarily for residential living. How do i amend my tax return online The rented part of your home is not a self-contained residential unit having separate sleeping, cooking, and toilet facilities. How do i amend my tax return online You do not rent (directly or by sublease) the same or different parts of your home to more than two tenants at any time during the tax year. How do i amend my tax return online If two persons (and dependents of either) share the same sleeping quarters, they are treated as one tenant. How do i amend my tax return online Office in home. How do i amend my tax return online   If you have an office in your home that you use in your business, see Publication 587, Business Use of Your Home. How do i amend my tax return online It explains how to figure your deduction for the business use of your home, which includes the business part of your home mortgage interest. How do i amend my tax return online Home under construction. How do i amend my tax return online   You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. How do i amend my tax return online   The 24-month period can start any time on or after the day construction begins. How do i amend my tax return online Home destroyed. How do i amend my tax return online   You may be able to continue treating your home as a qualified home even after it is destroyed in a fire, storm, tornado, earthquake, or other casualty. How do i amend my tax return online This means you can continue to deduct the interest you pay on your home mortgage, subject to the limits described in this publication. How do i amend my tax return online   You can continue treating a destroyed home as a qualified home if, within a reasonable period of time after the home is destroyed, you: Rebuild the destroyed home and move into it, or Sell the land on which the home was located. How do i amend my tax return online   This rule applies to your main home and to a second home that you treat as a qualified home. How do i amend my tax return online Time-sharing arrangements. How do i amend my tax return online   You can treat a home you own under a time-sharing plan as a qualified home if it meets all the requirements. How do i amend my tax return online A time-sharing plan is an arrangement between two or more people that limits each person's interest in the home or right to use it to a certain part of the year. How do i amend my tax return online Rental of time-share. How do i amend my tax return online   If you rent out your time-share, it qualifies as a second home only if you also use it as a home during the year. How do i amend my tax return online See Second home rented out , earlier, for the use requirement. How do i amend my tax return online To know whether you meet that requirement, count your days of use and rental of the home only during the time you have a right to use it or to receive any benefits from the rental of it. How do i amend my tax return online Married taxpayers. How do i amend my tax return online   If you are married and file a joint return, your qualified home(s) can be owned either jointly or by only one spouse. How do i amend my tax return online Separate returns. How do i amend my tax return online   If you are married filing separately and you and your spouse own more than one home, you can each take into account only one home as a qualified home. How do i amend my tax return online However, if you both consent in writing, then one spouse can take both the main home and a second home into account. How do i amend my tax return online Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. How do i amend my tax return online It also describes certain special situations that may affect your deduction. How do i amend my tax return online Late payment charge on mortgage payment. How do i amend my tax return online   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. How do i amend my tax return online Mortgage prepayment penalty. How do i amend my tax return online   If you pay off your home mortgage early, you may have to pay a penalty. How do i amend my tax return online You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. How do i amend my tax return online Sale of home. How do i amend my tax return online   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of the sale. How do i amend my tax return online Example. How do i amend my tax return online John and Peggy Harris sold their home on May 7. How do i amend my tax return online Through April 30, they made home mortgage interest payments of $1,220. How do i amend my tax return online The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. How do i amend my tax return online Their mortgage interest deduction is $1,270 ($1,220 + $50). How do i amend my tax return online Prepaid interest. How do i amend my tax return online   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. How do i amend my tax return online You can deduct in each year only the interest that qualifies as home mortgage interest for that year. How do i amend my tax return online However, there is an exception that applies to points, discussed later. How do i amend my tax return online Mortgage interest credit. How do i amend my tax return online    You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. How do i amend my tax return online Figure the credit on Form 8396, Mortgage Interest Credit. How do i amend my tax return online If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. How do i amend my tax return online   See Form 8396 and Publication 530 for more information on the mortgage interest credit. How do i amend my tax return online Ministers' and military housing allowance. How do i amend my tax return online   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. How do i amend my tax return online Hardest Hit Fund and Emergency Homeowners' Loan Programs. How do i amend my tax return online   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. How do i amend my tax return online You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. How do i amend my tax return online You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. How do i amend my tax return online If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098–MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums), and box 5 (other information including real property taxes paid). How do i amend my tax return online However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. How do i amend my tax return online Mortgage assistance payments under section 235 of the National Housing Act. How do i amend my tax return online   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. How do i amend my tax return online You cannot deduct the interest that is paid for you. How do i amend my tax return online No other effect on taxes. How do i amend my tax return online   Do not include these mortgage assistance payments in your income. How do i amend my tax return online Also, do not use these payments to reduce other deductions, such as real estate taxes. How do i amend my tax return online Divorced or separated individuals. How do i amend my tax return online   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. How do i amend my tax return online See the discussion of Payments for jointly-owned home under Alimony in Publication 504, Divorced or Separated Individuals. How do i amend my tax return online Redeemable ground rents. How do i amend my tax return online   In some states (such as Maryland), you can buy your home subject to a ground rent. How do i amend my tax return online A ground rent is an obligation you assume to pay a fixed amount per year on the property. How do i amend my tax return online Under this arrangement, you are leasing (rather than buying) the land on which your home is located. How do i amend my tax return online   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. How do i amend my tax return online   A ground rent is a redeemable ground rent if all of the following are true. How do i amend my tax return online Your lease, including renewal periods, is for more than 15 years. How do i amend my tax return online You can freely assign the lease. How do i amend my tax return online You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount. How do i amend my tax return online The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled. How do i amend my tax return online   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. How do i amend my tax return online Nonredeemable ground rents. How do i amend my tax return online   Payments on a nonredeemable ground rent are not mortgage interest. How do i amend my tax return online You can deduct them as rent if they are a business expense or if they are for rental property. How do i amend my tax return online Reverse mortgages. How do i amend my tax return online   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. How do i amend my tax return online With a reverse mortgage, you retain title to your home. How do i amend my tax return online Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. How do i amend my tax return online Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. How do i amend my tax return online Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full. How do i amend my tax return online Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II. How do i amend my tax return online Rental payments. How do i amend my tax return online   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. How do i amend my tax return online This is true even if the settlement papers call them interest. How do i amend my tax return online You cannot deduct these payments as home mortgage interest. How do i amend my tax return online Mortgage proceeds invested in tax-exempt securities. How do i amend my tax return online   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. How do i amend my tax return online “Grandfathered debt” and “home equity debt” are defined in Part II of this publication. How do i amend my tax return online Refunds of interest. How do i amend my tax return online   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. How do i amend my tax return online If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. How do i amend my tax return online However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. How do i amend my tax return online This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. How do i amend my tax return online If you need to include the refund in income, report it on Form 1040, line 21. How do i amend my tax return online   If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. How do i amend my tax return online For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. How do i amend my tax return online   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in Publication 525, Taxable and Nontaxable Income. How do i amend my tax return online Cooperative apartment owner. How do i amend my tax return online   If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. How do i amend my tax return online The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year. How do i amend my tax return online   If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct. How do i amend my tax return online Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. How do i amend my tax return online Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. How do i amend my tax return online This image is too large to be displayed in the current screen. How do i amend my tax return online Please click the link to view the image. How do i amend my tax return online Figure B. How do i amend my tax return online Are My Points Fully Deductible This Year? A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. How do i amend my tax return online See Points paid by the seller , later. How do i amend my tax return online General Rule You generally cannot deduct the full amount of points in the year paid. How do i amend my tax return online Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. How do i amend my tax return online See Deduction Allowed Ratably , next. How do i amend my tax return online For exceptions to the general rule, see Deduction Allowed in Year Paid , later. How do i amend my tax return online Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. How do i amend my tax return online You use the cash method of accounting. How do i amend my tax return online This means you report income in the year you receive it and deduct expenses in the year you pay them. How do i amend my tax return online Most individuals use this method. How do i amend my tax return online Your loan is secured by a home. How do i amend my tax return online (The home does not need to be your main home. How do i amend my tax return online ) Your loan period is not more than 30 years. How do i amend my tax return online If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. How do i amend my tax return online Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. How do i amend my tax return online Example. How do i amend my tax return online You use the cash method of accounting. How do i amend my tax return online In 2013, you took out a $100,000 loan payable over 20 years. How do i amend my tax return online The terms of the loan are the same as for other 20-year loans offered in your area. How do i amend my tax return online You paid $4,800 in points. How do i amend my tax return online You made 3 monthly payments on the loan in 2013. How do i amend my tax return online You can deduct $60 [($4,800 ÷ 240 months) x 3 payments] in 2013. How do i amend my tax return online In 2014, if you make all twelve payments, you will be able to deduct $240 ($20 x 12). How do i amend my tax return online Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. How do i amend my tax return online (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid. How do i amend my tax return online ) Your loan is secured by your main home. How do i amend my tax return online (Your main home is the one you ordinarily live in most of the time. How do i amend my tax return online ) Paying points is an established business practice in the area where the loan was made. How do i amend my tax return online The points paid were not more than the points generally charged in that area. How do i amend my tax return online You use the cash method of accounting. How do i amend my tax return online This means you report income in the year you receive it and deduct expenses in the year you pay them. How do i amend my tax return online Most individuals use this method. How do i amend my tax return online The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. How do i amend my tax return online The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. How do i amend my tax return online The funds you provided are not required to have been applied to the points. How do i amend my tax return online They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. How do i amend my tax return online You cannot have borrowed these funds from your lender or mortgage broker. How do i amend my tax return online You use your loan to buy or build your main home. How do i amend my tax return online The points were computed as a percentage of the principal amount of the mortgage. How do i amend my tax return online The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. How do i amend my tax return online The points may be shown as paid from either your funds or the seller's. How do i amend my tax return online Note. How do i amend my tax return online If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. How do i amend my tax return online Home improvement loan. How do i amend my tax return online   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. How do i amend my tax return online Second home. How do i amend my tax return online You cannot fully deduct in the year paid points you pay on loans secured by your second home. How do i amend my tax return online You can deduct these points only over the life of the loan. How do i amend my tax return online Refinancing. How do i amend my tax return online   Generally, points you pay to refinance a mortgage are not deductible in full in the year you pay them. How do i amend my tax return online This is true even if the new mortgage is secured by your main home. How do i amend my tax return online   However, if you use part of the refinanced mortgage proceeds to improve your main home and you meet the first 6 tests listed under Deduction Allowed in Year Paid , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. How do i amend my tax return online You can deduct the rest of the points over the life of the loan. How do i amend my tax return online Example 1. How do i amend my tax return online In 1998, Bill Fields got a mortgage to buy a home. How do i amend my tax return online In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. How do i amend my tax return online The mortgage is secured by his home. How do i amend my tax return online To get the new loan, he had to pay three points ($3,000). How do i amend my tax return online Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. How do i amend my tax return online Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. How do i amend my tax return online The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. How do i amend my tax return online Bill's first payment on the new loan was due July 1. How do i amend my tax return online He made six payments on the loan in 2013 and is a cash basis taxpayer. How do i amend my tax return online Bill used the funds from the new mortgage to repay his existing mortgage. How do i amend my tax return online Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. How do i amend my tax return online He cannot deduct all of the points in 2013. How do i amend my tax return online He can deduct two points ($2,000) ratably over the life of the loan. How do i amend my tax return online He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. How do i amend my tax return online The other point ($1,000) was a fee for services and is not deductible. How do i amend my tax return online Example 2. How do i amend my tax return online The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. How do i amend my tax return online Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. How do i amend my tax return online His deduction is $500 ($2,000 × 25%). How do i amend my tax return online Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. How do i amend my tax return online This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. How do i amend my tax return online The total amount Bill deducts in 2013 is $550 ($500 + $50). How do i amend my tax return online Special Situations This section describes certain special situations that may affect your deduction of points. How do i amend my tax return online Original issue discount. How do i amend my tax return online   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. How do i amend my tax return online This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. How do i amend my tax return online Amounts charged for services. How do i amend my tax return online    Amounts charged by the lender for specific services connected to the loan are not interest. How do i amend my tax return online Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. How do i amend my tax return online  You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. How do i amend my tax return online Points paid by the seller. How do i amend my tax return online   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. How do i amend my tax return online Treatment by seller. How do i amend my tax return online   The seller cannot deduct these fees as interest. How do i amend my tax return online But they are a selling expense that reduces the amount realized by the seller. How do i amend my tax return online See Publication 523 for information on selling your home. How do i amend my tax return online Treatment by buyer. How do i amend my tax return online   The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. How do i amend my tax return online If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. How do i amend my tax return online If any of those tests are not met, the buyer deducts the points over the life of the loan. How do i amend my tax return online   If you need information about the basis of your home, see Publication 523 or Publication 530. How do i amend my tax return online Funds provided are less than points. How do i amend my tax return online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. How do i amend my tax return online In addition, you can deduct any points paid by the seller. How do i amend my tax return online Example 1. How do i amend my tax return online When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). How do i amend my tax return online You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. How do i amend my tax return online Of the $1,000 charged for points, you can deduct $750 in the year paid. How do i amend my tax return online You spread the remaining $250 over the life of the mortgage. How do i amend my tax return online Example 2. How do i amend my tax return online The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. How do i amend my tax return online In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). How do i amend my tax return online You spread the remaining $250 over the life of the mortgage. How do i amend my tax return online You must reduce the basis of your home by the $1,000 paid by the seller. How do i amend my tax return online Excess points. How do i amend my tax return online   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. How do i amend my tax return online You must spread any additional points over the life of the mortgage. How do i amend my tax return online Mortgage ending early. How do i amend my tax return online   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. How do i amend my tax return online However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. How do i amend my tax return online Instead, deduct the remaining balance over the term of the new loan. How do i amend my tax return online   A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. How do i amend my tax return online Example. How do i amend my tax return online Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. How do i amend my tax return online He deducts $200 points per year. How do i amend my tax return online Through 2012, Dan has deducted $2,200 of the points. How do i amend my tax return online Dan prepaid his mortgage in full in 2013. How do i amend my tax return online He can deduct the remaining $800 of points in 2013. How do i amend my tax return online Limits on deduction. How do i amend my tax return online   You cannot fully deduct points paid on a mortgage that exceeds the limits discussed in Part II . How do i amend my tax return online See the Table 1 Instructions for line 10. How do i amend my tax return online Form 1098. How do i amend my tax return online    The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid during the year. How do i amend my tax return online See Form 1098, Mortgage Interest Statement , later. How do i amend my tax return online Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. How do i amend my tax return online The insurance must be in connection with home acquisition debt, and the insurance contract must have been issued after 2006. How do i amend my tax return online Qualified mortgage insurance. How do i amend my tax return online   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). How do i amend my tax return online   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. How do i amend my tax return online If provided by the Rural Housing Service, it is commonly known as a guarantee fee. How do i amend my tax return online The funding fee and guarantee fee can either be included in the amount of the loan or paid in full at the time of closing. How do i amend my tax return online These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. How do i amend my tax return online Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. How do i amend my tax return online Special rules for prepaid mortgage insurance. How do i amend my tax return online   Generally, if you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. How do i amend my tax return online You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. How do i amend my tax return online No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. How do i amend my tax return online This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. How do i amend my tax return online Example. How do i amend my tax return online Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. How do i amend my tax return online Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. How do i amend my tax return online Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. How do i amend my tax return online Ryan's adjusted gross income (AGI) for 2012 is $76,000. How do i amend my tax return online Ryan can deduct $880 ($9,240 ÷ 84 x 8 months) for qualified mortgage insurance premiums in 2012. How do i amend my tax return online For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 x 12 months) if his AGI is $100,000 or less. How do i amend my tax return online In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). How do i amend my tax return online Limit on deduction. How do i amend my tax return online   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. How do i amend my tax return online See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. How do i amend my tax return online If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. How do i amend my tax return online Form 1098. How do i amend my tax return online   The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest. How do i amend my tax return online See Form 1098, Mortgage Interest Statement, next. How do i amend my tax return online Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. How do i amend my tax return online You will receive the statement if you pay interest to a person (including a financial institution or cooperative housing corporation) in the course of that person's trade or business. How do i amend my tax return online A governmental unit is a person for purposes of furnishing the statement. How do i amend my tax return online The statement for each year should be sent to you by January 31 of the following year. How do i amend my tax return online A copy of this form will also be sent to the IRS. How do i amend my tax return online The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. How do i amend my tax return online However, it should not show any interest that was paid for you by a government agency. How do i amend my tax return online As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. How do i amend my tax return online However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. How do i amend my tax return online See the earlier discussion of Points to determine whether you can deduct points not shown on Form 1098. How do i amend my tax return online Prepaid interest on Form 1098. How do i amend my tax return online   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. How do i amend my tax return online However, you cannot deduct the prepaid amount for January 2014 in 2013. How do i amend my tax return online (See Prepaid interest , earlier. How do i amend my tax return online ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. How do i amend my tax return online You will include the interest for January 2014 with other interest you pay for 2014. How do i amend my tax return online Refunded interest. How do i amend my tax return online   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. How do i amend my tax return online See Refunds of interest , earlier. How do i amend my tax return online Mortgage insurance premiums. How do i amend my tax return online   The amount of mortgage insurance premiums you paid during 2013 may be shown in Box 4 of Form 1098. How do i amend my tax return online See Mortgage Insurance Premiums , earlier. How do i amend my tax return online How To Report Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. How do i amend my tax return online If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. How do i amend my tax return online Attach a statement explaining the difference and print “See attached” next to line 10. How do i amend my tax return online Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. How do i amend my tax return online If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. How do i amend my tax return online The seller must give you this number and you must give the seller your TIN. How do i amend my tax return online A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. How do i amend my tax return online Failure to meet any of these requirements may result in a $50 penalty for each failure. How do i amend my tax return online The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. How do i amend my tax return online If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. How do i amend my tax return online Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. How do i amend my tax return online More than one borrower. How do i amend my tax return online   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. How do i amend my tax return online Show how much of the interest each of you paid, and give the name and address of the person who received the form. How do i amend my tax return online Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. How do i amend my tax return online Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. How do i amend my tax return online   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. How do i amend my tax return online Let each of the other borrowers know what his or her share is. How do i amend my tax return online Mortgage proceeds used for business or investment. How do i amend my tax return online   If your home mortgage interest deduction is limited under the rules explained in Part II , but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 2 near the end of this publication. How do i amend my tax return online It shows where to deduct the part of your excess interest that is for those activities. How do i amend my tax return online The Table 1 Instructions for line 13 in Part II explain how to divide the excess interest among the activities for which the mortgage proceeds were used. How do i amend my tax return online Special Rule for Tenant-Stockholders in Cooperative Housing Corporations A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. How do i amend my tax return online This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative. How do i amend my tax return online Cooperative housing corporation. How do i amend my tax return online   This is a corporation that meets all of the following conditions. How do i amend my tax return online Has only one class of stock outstanding, Has no stockholders other than those who own the stock that can live in a house, apartment, or house trailer owned or leased by the corporation, Has no stockholders who can receive any distribution out of capital other than on a liquidation of the corporation, and Meets at least one of the following requirements. How do i amend my tax return online Receives at least 80% of its gross income for the year in which the mortgage interest is paid or incurred from tenant-stockholders. How do i amend my tax return online For this purpose, gross income is all income received during the entire year, including amounts received before the corporation changed to cooperative ownership. How do i amend my tax return online At all times during the year, at least 80% of the total square footage of the corporation's property is used or available for use by the tenant-stockholders for residential or residential-related use. How do i amend my tax return online At least 90% of the corporation's expenditures paid or incurred during the year are for the acquisition, construction, management, maintenance, or care of corporate property for the benefit of the tenant-stockholders. How do i amend my tax return online Stock used to secure debt. How do i amend my tax return online   In some cases, you cannot use your cooperative housing stock to secure a debt because of either: Restrictions under local or state law, or Restrictions in the cooperative agreement (other than restrictions in which the main purpose is to permit the tenant- stockholder to treat unsecured debt as secured debt). How do i amend my tax return online However, you can treat a debt as secured by the stock to the extent that the proceeds are used to buy the stock under the allocation of interest rules. How do i amend my tax return online See chapter 4 of Publication 535 for details on these rules. How do i amend my tax return online Figuring deductible home mortgage interest. How do i amend my tax return online   Generally, if you are a tenant-stockholder, you can deduct payments you make for your share of the interest paid or incurred by the cooperative. How do i amend my tax return online The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. How do i amend my tax return online   Figure your share of this interest by multiplying the total by the following fraction. How do i amend my tax return online      Your shares of stock in the cooperative   The total shares of stock in the cooperative Limits on deduction. How do i amend my tax return online   To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. How do i amend my tax return online The cooperative should determine your share of its grandfathered debt, its home acquisition debt, and its home equity debt. How do i amend my tax return online (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given. How do i amend my tax return online ) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock. How do i amend my tax return online Form 1098. How do i amend my tax return online    The cooperative should give you a Form 1098 showing your share of the interest. How do i amend my tax return online Use the rules in this publication to determine your deductible mortgage interest. How do i amend my tax return online Part II. How do i amend my tax return online Limits on Home Mortgage Interest Deduction This part of the publication discusses the limits on deductible home mortgage interest. How do i amend my tax return online These limits apply to your home mortgage interest expense if you have a home mortgage that does not fit into any of the three categories listed at the beginning of Part I under Fully deductible interest . How do i amend my tax return online Your home mortgage interest deduction is limited to the interest on the part of your home mortgage debt that is not more than your qualified loan limit. How do i amend my tax return online This is the part of your home mortgage debt that is grandfathered debt or that is not more than the limits for home acquisition debt and home equity debt. How do i amend my tax return online Table 1 can help you figure your qualified loan limit and your deductible home mortgage interest. How do i amend my tax return online Home Acquisition Debt Home acquisition debt is a mortgage you took out after October 13, 1987, to buy, build, or substantially improve a qualified home (your main or second home). How do i amend my tax return online It also must be secured by that home. How do i amend my tax return online If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that is not more than the cost of the home plus improvements qualifies as home acquisition debt. How do i amend my tax return online The additional debt may qualify as home equity debt (discussed later). How do i amend my tax return online Home acquisition debt limit. How do i amend my tax return online   The total amount you can treat as home acquisition debt at any time on your main home and second home cannot be more than $1 million ($500,000 if married filing separately). How do i amend my tax return online This limit is reduced (but not below zero) by the amount of your grandfathered debt (discussed later). How do i amend my tax return online Debt over this limit may qualify as home equity debt (also discussed later). How do i amend my tax return online Refinanced home acquisition debt. How do i amend my tax return online   Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. How do i amend my tax return online However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. How do i amend my tax return online Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt (discussed later). How do i amend my tax return online Mortgage that qualifies later. How do i amend my tax return online   A mortgage that does not qualify as home acquisition debt because it does not meet all the requirements may qualify at a later time. How do i amend my tax return online For example, a debt that you use to buy your home may not qualify as home acquisition debt because it is not secured by the home. How do i amend my tax return online However, if the debt is later secured by the home, it may qualify as home acquisition debt after that time. How do i amend my tax return online Similarly, a debt that you use to buy property may not qualify because the property is not a qualified home. How do i amend my tax return online However, if the property later becomes a qualified home, the debt may qualify after that time. How do i amend my tax return online Mortgage treated as used to buy, build, or improve home. How do i amend my tax return online   A mortgage secured by a qualified home may be treated as home acquisition debt, even if you do not actually use the proceeds to buy, build, or substantially improve the home. How do i amend my tax return online This applies in the following situations. How do i amend my tax return online You buy your home within 90 days before or after the date you take out the mortgage. How do i amend my tax return online The home acquisition debt is limited to the home's cost, plus the cost of any substantial improvements within the limit described below in (2) or (3). How do i amend my tax return online (See Example 1 later. How do i amend my tax return online ) You build or improve your home and take out the mortgage before the work is completed. How do i amend my tax return online The home acquisition debt is limited to the amount of the expenses incurred within 24 months before the date of the mortgage. How do i amend my tax return online You build or improve your home and take out the mortgage within 90 days after the work is completed. How do i amend my tax return online The home acquisition debt is limited to the amount of the expenses incurred within the period beginning 24 months before the work is completed and ending on the date of the mortgage. How do i amend my tax return online (See Example 2 later. How do i amend my tax return online ) Example 1. How do i amend my tax return online You bought your main home on June 3 for $175,000. How do i amend my tax return online You paid for the home with cash you got from the sale of your old home. How do i amend my tax return online On July 15, you took out a mortgage of $150,000 secured by your main home. How do i amend my tax return online You used the $150,000 to invest in stocks. How do i amend my tax return online You can treat the mortgage as taken out to buy your home because you bought the home within 90 days before you took out the mortgage. How do i amend my tax return online The entire mortgage qualifies as home acquisition debt because it was not more than the home's cost. How do i amend my tax return online Example 2. How do i amend my tax return online On January 31, John began building a home on the lot that he owned. How do i amend my tax return online He used $45,000 of his personal funds to build the home. How do i amend my tax return online The home was completed on October 31. How do i amend my tax return online On November 21, John took out a $36,000 mortgage that was secured by the home. How do i amend my tax return online The mortgage can be treated as used to build the home because it was taken out within 90 days after the home was completed. How do i amend my tax return online The entire mortgage qualifies as home acquisition debt because it was not more than the expenses incurred within the period beginning 24 months before the home was completed. How do i amend my tax return online This is illustrated by Figure C. How do i amend my tax return online   Please click here for the text description of the image. How do i amend my tax return online Figure C. How do i amend my tax return online John's example Date of the mortgage. How do i amend my tax return online   The date you take out your mortgage is the day the loan proceeds are disbursed. How do i amend my tax return online This is generally the closing date. How do i amend my tax return online You can treat the day you apply in writing for your mortgage as the date you take it out. How do i amend my tax return online However, this applies only if you receive the loan proceeds within a reasonable time (such as within 30 days) after your application is approved. How do i amend my tax return online If a timely application you make is rejected, a reasonable additional time will be allowed to make a new application. How do i amend my tax return online Cost of home or improvements. How do i amend my tax return online   To determine your cost, include amounts paid to acquire any interest in a qualified home or to substantially improve the home. How do i amend my tax return online   The cost of building or substantially improving a qualified home includes the costs to acquire real property and building materials, fees for architects and design plans, and required building permits. How do i amend my tax return online Substantial improvement. How do i amend my tax return online   An improvement is substantial if it: Adds to the value of your home, Prolongs your home's useful life, or Adapts your home to new uses. How do i amend my tax return online    Repairs that maintain your home in good condition, such as repainting your home, are not substantial improvements. How do i amend my tax return online However, if you paint your home as part of a renovation that substantially improves your qualified home, you can include the painting costs in the cost of the improvements. How do i amend my tax return online Acquiring an interest in a home because of a divorce. How do i amend my tax return online   If you incur debt to acquire the interest of a spouse or former spouse in a home, because of a divorce or legal separation, you can treat that debt as home acquisition debt. How do i amend my tax return online Part of home not a qualified home. How do i amend my tax return online    To figure your home acquisition debt, you must divide the cost of your home and improvements between the part of your home that is a qualified home and any part that is not a qualified home. How do i amend my tax return online See Divided use of your home under Qualified Home in Part I. How do i amend my tax return online Home Equity Debt If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. How do i amend my tax return online In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt. How do i amend my tax return online Home equity debt is a mortgage you took out after October 13, 1987, that: Does not qualify as home acquisition debt or as grandfathered debt, and Is secured by your qualified home. How do i amend my tax return online Example. How do i amend my tax return online You bought your home for cash 10 years ago. How do i amend my tax return online You did not have a mortgage on your home until last year, when you took out a $50,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. How do i amend my tax return online This loan is home equity debt. How do i amend my tax return online Home equity debt limit. How do i amend my tax return online   There is a limit on the amount of debt that can be treated as home equity debt. How do i amend my tax return online The total home equity debt on your main home and second home is limited to the smaller of: $100,000 ($50,000 if married filing separately), or The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. How do i amend my tax return online Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home. How do i amend my tax return online Example. How do i amend my tax return online You own one home that you bought in 2000. How do i amend my tax return online Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. How do i amend my tax return online Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. How do i amend my tax return online To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000] with Bank M. How do i amend my tax return online Your home equity debt is limited to $15,000. How do i amend my tax return online This is the smaller of: $100,000, the maximum limit, or $15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000. How do i amend my tax return online Debt higher than limit. How do i amend my tax return online   Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000] in the preceding example) generally is treated as personal interest and is not deductible. How do i amend my tax return online But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. How do i amend my tax return online If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest. How do i amend my tax return online Part of home not a qualified home. How do i amend my tax return online   To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. How do i amend my tax return online See Divided use of your home under Qualified Home in Part I. How do i amend my tax return online Fair market value (FMV). How do i amend my tax return online    This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. How do i amend my tax return online Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV. How do i amend my tax return online Grandfathered Debt If you took out a mortgage on your home before October 14, 1987, or you refinanced such a mortgage, it may qualify as grandfathered debt. How do i amend my tax return online To qualify, it must have been secured by your qualified home on October 13, 1987, and at all times after that date. How do i amend my tax return online How you used the proceeds does not matter. How do i amend my tax return online Grandfathered debt is not limited. How do i amend my tax return online All of the interest you paid on grandfathered debt is fully deductible home mortgage interest. How do i amend my tax return online However, the amount of your grandfathered debt reduces the $1 million limit for home acquisition debt and the limit based on your home's fair market value for home equity debt. How do i amend my tax return online Refinanced grandfathered debt. How do i amend my tax return online   If you refinanced grandfathered debt after October 13, 1987, for an amount that was not more than the mortgage principal left on the debt, then you still treat it as grandfathered debt. How do i amend my tax return online To the extent the new debt is more than that mortgage principal, it is treated as home acquisition or home equity debt, and the mortgage is a mixed-use mortgage (discussed later under Average Mortgage Balance in the Table 1 instructions). How do i amend my tax return online The debt must be secured by the qualified home. How do i amend my tax return online   You treat grandfathered debt that was refinanced after October 13, 1987, as grandfathered debt only for the term left on the debt that was refinanced. How do i amend my tax return online After that, you treat it as home acquisition debt or home equity debt, depending on how you used the proceeds. How do i amend my tax return online Exception. How do i amend my tax return online   If the debt before refinancing was like a balloon note (the principal on the debt was not amortized over the term of the debt), then you treat the refinanced debt as grandfathered debt for the term of the first refinancing. How do i amend my tax return online This term cannot be more than 30 years. How do i amend my tax return online Example. How do i amend my tax return online Chester took out a $200,000 first mortgage on his home in 1986. How do i amend my tax return online The mortgage was a five-year balloon note and the entire balance on the note was due in 1991. How do i amend my tax return online Chester refinanced the debt in 1991 with a new 20-year mortgage. How do i amend my tax return online The refinanced debt is treated as grandfathered debt for its entire term (20 years). How do i amend my tax return online Line-of-credit mortgage. How do i amend my tax return online    If you had a line-of-credit mortgage on October 13, 1987, and borrowed additional amounts against it after that date, then the additional amounts are either home acquisition debt or home equity debt depending on how you used the proceeds. How do i amend my tax return online The balance on the mortgage before you borrowed the additional amounts is grandfathered debt. How do i amend my tax return online The newly borrowed amounts are not grandfathered debt because the funds were borrowed after October 13, 1987. How do i amend my tax return online See Average Mortgage Balance in the Table 1 Instructions that follow. How do i amend my tax return online Table 1 Instructions Unless you are subject to the overall limit on itemized deductions, you can deduct all of the interest you paid during the year on mortgages secured by your main home or second home in either of the following two situations. How do i amend my tax return online All the mortgages are grandfathered debt. How do i amend my tax return online The total of the mortgage balances for the entire year is within the limits discussed earlier under Home Acquisition Debt and Home Equity Debt . How do i amend my tax return online In either of those cases, you do not need Table 1. How do i amend my tax return online Otherwise, you can use Table 1 to determine your qualified loan limit and deductible home mortgage interest. How do i amend my tax return online Fill out only one Table 1 for both your main and second home regardless of how many mortgages you have. How do i amend my tax return online Table 1. How do i amend my tax return online Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. How do i amend my tax return online Part I Qualified Loan Limit 1. How do i amend my tax return online Enter the average balance of all your grandfathered debt. How do i amend my tax return online See line 1 instructions 1. How do i amend my tax return online   2. How do i amend my tax return online Enter the average balance of all your home acquisition debt. How do i amend my tax return online See line 2 instructions 2. How do i amend my tax return online   3. How do i amend my tax return online Enter $1,000,000 ($500,000 if married filing separately) 3. How do i amend my tax return online   4. How do i amend my tax return online Enter the larger of the amount on line 1 or the amount on line 3 4. How do i amend my tax return online   5. How do i amend my tax return online Add the amounts on lines 1 and 2. How do i amend my tax return online Enter the total here 5. How do i amend my tax return online   6. How do i amend my tax return online Enter the smaller of the amount on line 4 or the amount on line 5 6. How do i amend my tax return online   7. How do i amend my tax return online If you have home equity debt, enter the smaller of $100,000 ($50,000 if married filing separately) or your limited amount. How do i amend my tax return online See the line 7 instructions for the limit which may apply to you. How do i amend my tax return online 7. How do i amend my tax return online   8. How do i amend my tax return online Add the amounts on lines 6 and 7. How do i amend my tax return online Enter the total. How do i amend my tax return online This is your qualified loan limit. How do i amend my tax return online 8. How do i amend my tax return online   Part II Deductible Home Mortgage Interest 9. How do i amend my tax return online Enter the total of the average balances of all mortgages on all qualified homes. How do i amend my tax return online  See line 9 instructions 9. How do i amend my tax return online     If line 8 is less than line 9, go on to line 10. How do i amend my tax return online If line 8 is equal to or more than line 9, stop here. How do i amend my tax return online All of your interest on all the mortgages included on line 9 is deductible as home mortgage interest on Schedule A (Form 1040). How do i amend my tax return online     10. How do i amend my tax return online Enter the total amount of interest that you paid. How do i amend my tax return online See line 10 instructions 10. How do i amend my tax return online   11. How do i amend my tax return online Divide the amount on line 8 by the amount on line 9. How do i amend my tax return online Enter the result as a decimal amount (rounded to three places) 11. How do i amend my tax return online × . How do i amend my tax return online 12. How do i amend my tax return online Multiply the amount on line 10 by the decimal amount on line 11. How do i amend my tax return online Enter the result. How do i amend my tax return online This is your deductible home mortgage interest. How do i amend my tax return online Enter this amount on Schedule A (Form 1040) 12. How do i amend my tax return online   13. How do i amend my tax return online Subtract the amount on line 12 from the amount on line 10. How do i amend my tax return online Enter the result. How do i amend my tax return online This is not home mortgage interest. How do i amend my tax return online See line 13 instructions 13. How do i amend my tax return online   Home equity debt only. How do i amend my tax return online   If all of your mortgages are home equity debt, do not fill in lines 1 through 5. How do i amend my tax return online Enter zero on line 6 and complete the rest of Table 1. How do i amend my tax return online Average Mortgage Balance You have to figure the average balance of each mortgage to determine your qualified loan limit. How do i amend my tax return online You need these amounts to complete lines 1, 2, and 9 of Table 1. How do i amend my tax return online You can use the highest mortgage balances during the year, but you may benefit most by using the average balances. How do i amend my tax return online The following are methods you can use to figure your average mortgage balances. How do i amend my tax return online However, if a mortgage has more than one category of debt, see Mixed-use mortgages , later, in this section. How do i amend my tax return online Average of first and last balance method. How do i amend my tax return online   You can use this method if all the following apply. How do i amend my tax return online You did not borrow any new amounts on the mortgage during the year. How do i amend my tax return online (This does not include borrowing the original mortgage amount. How do i amend my tax return online ) You did not prepay more than one month's principal during the year. How do i amend my tax return online (This includes prepayment by refinancing your home or by applying proceeds from its sale. How do i amend my tax return online ) You had to make level payments at fixed equal intervals on at least a semi-annual basis. How do i amend my tax return online You treat your payments as level even if they were adjusted from time to time because of changes in the interest rate. How do i amend my tax return online    To figure your average balance, complete the following worksheet. How do i amend my tax return online    1. How do i amend my tax return online Enter the balance as of the first day of the year that the mortgage was secured by your qualified home during the year (generally January 1)   2. How do i amend my tax return online Enter the balance as of the last day of the year that the mortgage was secured by your qualified home during the year (generally December 31)   3. How do i amend my tax return online Add amounts on lines 1 and 2   4. How do i amend my tax return online Divide the amount on line 3 by 2. How do i amend my tax return online Enter the result   Interest paid divided by interest rate method. How do i amend my tax return online   You can use this method if at all times in 2013 the mortgage was secured by your qualified home and the interest was paid at least monthly. How do i amend my tax return online    Complete the following worksheet to figure your average balance. How do i amend my tax return online    1. How do i amend my tax return online Enter the interest paid in 2013. How do i amend my tax return online Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. How do i amend my tax return online However, do include interest that is for 2013 but was paid in an earlier year   2. How do i amend my tax return online Enter the annual interest rate on the mortgage. How do i amend my tax return online If the interest rate varied in 2013, use the lowest rate for the year   3. How do i amend my tax return online Divide the amount on line 1 by the amount on line 2. How do i amend my tax return online Enter the result   Example. How do i amend my tax return online Mr. How do i amend my tax return online Blue had a line of credit secured by his main home all year. How do i amend my tax return online He paid interest of $2,500 on this loan. How do i amend my tax return online The interest rate on the loan was 9% (. How do i amend my tax return online 09) all year. How do i amend my tax return online His average balance using this method is $27,778, figured as follows. How do i amend my tax return online 1. How do i amend my tax return online Enter the interest paid in 2013. How do i amend my tax return online Do not include points, mortgage insurance premiums, or any interest paid in 2013 that is for a year after 2013. How do i amend my tax return online However, do include interest that is for 2013 but was paid in an earlier year $2,500 2. How do i amend my tax return online Enter the annual interest rate on the mortgage. How do i amend my tax return online If the interest rate varied in 2013, use the lowest rate for the year . How do i amend my tax return online 09 3. How do i amend my tax return online Divide the amount on line 1 by the amount on line 2. How do i amend my tax return online Enter the result $27,778 Statements provided by your lender. How do i amend my tax return online   If you receive monthly statements showing the closing balance or the average balance for the month, you can use either to figure your average balance for the year. How do i amend my tax return online You can treat the balance as zero for any month the mortgage was not secured by your qualified home. How do i amend my tax return online   For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. How do i amend my tax return online   If your lender can give you your average balance for the year, you can use that amount. How do i amend my tax return online Example. How do i amend my tax return online Ms. How do i amend my tax return online Brown had a home equity loan secured by her main home all year. How do i amend my tax return online She received monthly statements showing her average balance for each month. How do i amend my tax return online She can figure her average balance for the year by adding her monthly average balances and dividing the total by 12. How do i amend my tax return online Mixed-use mortgages. How do i amend my tax return online   A mixed-use mortgage is a loan that consists of more than one of the three categories of debt (grandfathered debt, home acquisition debt, and home equity debt). How do i amend my tax return online For example, a mortgage you took out during the year is a mixed-use mortgage if you used its proceeds partly to refinance a mortgage that you took out in an earlier year to buy your home (home acquisition debt) and partly to buy a car (home equity debt). How do i amend my tax return online   Complete lines 1 and 2 of Table 1 by including the separate average balances of any grandfathered debt and home acquisition debt in your mixed-use mortgage. How do i amend my tax return online Do not use the methods described earlier in this section to figure the average balance of either category. How do i amend my tax return online Instead, for each category, use the following method. How do i amend my tax return online Figure the balance of that category of debt for each month. How do i amend my tax return online This is the amount of the loan proceeds allocated to that category, reduced by your principal payments on the mortgage previously applied to that category. How do i amend my tax return online Principal payments on a mixed-use mortgage are applied in full to each category of debt, until its balance is zero, in the following order: First, any home equity debt, Next, any grandfathered debt, and Finally, any home acquisition debt. How do i amend my tax return online Add together the monthly balances figured in (1). How do i amend my tax return online Divide the result in (2) by 12. How do i amend my tax return online   Complete line 9 of Table 1 by including the average balance of the entire mixed-use mortgage, figured under one of the methods described earlier in this section. How do i amend my tax return online Example 1. How do i amend my tax return online In 1986, Sharon took out a $1,400,000 mortgage to buy her main home (grandfathered debt). How do i amend my tax return online On March 2, 2013, when the home had a fair market value of $1,700,000 and she owed $1,100,000 on the mortgage, Sharon took out a second mortgage for $200,000. How do i amend my tax return online She used $180,000 of the proceeds to make substantial improvements to her home (home acquisition debt) and the remaining $20,000 to buy a car (home equity debt). How do i amend my tax return online Under the loan agreement, Sharon must make principal payments of $1,000 at the end of each month. How do i amend my tax return online During 2013, her principal payments on the second mortgage totaled $10,000. How do i amend my tax return online To complete Table 1, line 2, Sharon must figure a separate average balance for the part of her second mortgage that is home acquisition debt. How do i amend my tax return online The January and February balances were zero. How do i amend my tax return online The March through December balances were all $180,000, because none of her principal payments are applied to the home acquisition debt. How do i amend my tax return online (They are all applied to the home equity debt, reducing it to $10,000 [$20,000 − $10,000]. How do i amend my tax return online ) The monthly balances of the home acquisition debt total $1,800,000 ($180,000 × 10). How do i amend my tax return online Therefore, the average balance of the home acquisition debt for 2013 was $150,000 ($1,800,000 ÷ 12). How do i amend my tax return online Example 2. How do i amend my tax return online The facts are the same as in Example 1. How do i amend my tax return online In 2014, Sharon's January through October principal payments on her second mortgage are applied to the home equity debt, reducing it to zero. How do i amend my tax return online The balance of the home acquisition debt remains $180,000 for each of those months. How do i amend my tax return online Because her November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 − $1,000) and the December balance is $178,000 ($180,000 − $2,000). How do i amend my tax return online The monthly balances total $2,157,000 [($180,000 × 10) + $179,000 + $178,000]. How do i amend my tax return online Therefore, the average balance of the home acquisition debt for 2014 is $179,750 ($2,157,000 ÷ 12). How do i amend my tax return online L
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Understanding Your CP161 Notice

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The How Do I Amend My Tax Return Online

How do i amend my tax return online 14. How do i amend my tax return online   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Fuels Used in FarmingBuyer of fuel, including undyed diesel fuel or undyed kerosene. How do i amend my tax return online Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). How do i amend my tax return online Custom application of fertilizer and pesticide. How do i amend my tax return online Fuel not used for farming. How do i amend my tax return online Dyed Diesel Fuel and Dyed Kerosene Fuels Used in Off-Highway Business Use Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines How To Claim a Credit or RefundCredit only. How do i amend my tax return online Claiming a Credit Claiming a Refund Including the Credit or Refund in Income Introduction You may be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. How do i amend my tax return online You may also be eligible to claim a quarterly refund of the fuel taxes during the year, instead of waiting to claim a credit on your income tax return. How do i amend my tax return online Whether you can claim a credit or refund depends on whether the fuel was taxed and the purpose (nontaxable use) for which you used the fuel. How do i amend my tax return online The nontaxable uses of fuel for which a farmer may claim a credit or refund are generally the following. How do i amend my tax return online Use on a farm for farming purposes. How do i amend my tax return online Off-highway business use. How do i amend my tax return online Uses other than as a fuel in a propulsion engine, such as home use. How do i amend my tax return online Table 14-1 presents an overview of credits and refunds that may be claimed for fuels used for the nontaxable uses listed above. How do i amend my tax return online See Publication 510, Excise Taxes, for more information. How do i amend my tax return online Topics - This chapter discusses: Fuels used in farming Dyed diesel fuel and dyed kerosene Fuels used in off-highway business use Fuels used for household purposes How to claim a credit or refund Including the credit or refund in income Useful Items - You may want to see: Publication 510 Excise Taxes Form (and Instructions) 720 Quarterly Federal Excise Tax Return 4136 Credit for Federal Tax Paid on Fuels 8849 Claim for Refund of Excise Taxes See chapter 16 for information about getting publications and forms. How do i amend my tax return online Fuels Used in Farming Owners, operators, and tenants of farms and certain other persons may be eligible to claim a credit or refund of excise taxes on fuel used in the trade or business of farming, when used on a farm in the United States for farming purposes. How do i amend my tax return online See Table 14-1 for a list of available fuel tax credits and refunds. How do i amend my tax return online Fuel is used on a farm for farming purposes only if used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. How do i amend my tax return online Farm. How do i amend my tax return online   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms, orchards, plantations, ranches, nurseries, ranges, and feed yards for finishing cattle. How do i amend my tax return online It also includes structures such as greenhouses used primarily for raising agricultural or horticultural commodities. How do i amend my tax return online A fish farm is an area where fish are grown or raised and not merely caught or harvested. How do i amend my tax return online Table 14-1. How do i amend my tax return online Fuel Tax Credits and Refunds at a Glance Use this table to see if you can take a credit or refund for a nontaxable use of the fuel listed. How do i amend my tax return online Fuel Used On a Farm for Farming Purposes Off-Highway Business Use Household Use or Use Other Than as a Fuel1 Gasoline Credit only Credit or refund None Aviation gasoline Credit only None None Undyed diesel fuel and undyed kerosene Credit or refund Credit or refund2 Credit or refund2 Kerosene for use in aviation Credit or refund None None Dyed diesel fuel and dyed kerosene None None None Other Fuels (including alternative fuels)3 Credit or refund Credit or refund None 1For a use other than as fuel in a propulsion engine. How do i amend my tax return online 2Applies to undyed kerosene not sold from a blocked pump or, under certain circumstances, for blending with undyed diesel fuel to be used for heating purposes. How do i amend my tax return online See Reg. How do i amend my tax return online 48. How do i amend my tax return online 6427-10 (b)(1) for the definition of a blocked pump. How do i amend my tax return online 3Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under Internal Revenue Code section 4081. How do i amend my tax return online It includes the alternative fuels: liquefied petroleum gas (LPG),“P” Series fuels, compressed natural gas (CNG), liquefied hydrogen, any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, liquid fuel derived from biomass, liquid natural gas (LNG), liquefied gas derived from biomass, and compressed gas derived from biomass. How do i amend my tax return online Farming purposes. How do i amend my tax return online   As the owner, tenant, or operator and the ultimate purchaser of fuel that you purchased, you use the fuel on a farm for farming purposes if you use it in any of the following ways. How do i amend my tax return online To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. How do i amend my tax return online To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. How do i amend my tax return online To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. How do i amend my tax return online To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. How do i amend my tax return online For this use to qualify, you must have produced more than half the commodity so treated during the tax year. How do i amend my tax return online The more-than-one-half test applies separately to each commodity. How do i amend my tax return online Commodity means a single raw product. How do i amend my tax return online For example, apples and peaches are two separate commodities. How do i amend my tax return online To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if these activities are incidental to your farming operations. How do i amend my tax return online Your tree operations are incidental only if they are minor in nature when compared to the total farming operations. How do i amend my tax return online   If any other person, such as a neighbor or custom operator (independent contractor), performs a service for you on your farm for any of the purposes included in list items (1) or (2), above, you are considered to be the ultimate purchaser who used the fuel on a farm for farming purposes. How do i amend my tax return online Therefore, you can still claim the credit or refund for the fuel so used. How do i amend my tax return online However, see Custom application of fertilizer and pesticide, later. How do i amend my tax return online If the other person performs any other services for you on your farm for purposes not included in list items (1) or (2) above, no one can claim the credit or refund for fuel used on your farm for those other services. How do i amend my tax return online Buyer of fuel, including undyed diesel fuel or undyed kerosene. How do i amend my tax return online   If doubt exists whether the owner, tenant, or operator of the farm bought the fuel, determine who actually bore the cost of the fuel. How do i amend my tax return online For example, if the owner of a farm and his or her tenant equally share the cost of gasoline used on the farm, each can claim a credit for the tax on half the fuel used. How do i amend my tax return online Undyed diesel fuel, undyed kerosene, and Other Fuels (including alternative fuel). How do i amend my tax return online   Usually, the farmer is the only person who can make a claim for credit or refund for the tax on undyed diesel fuel, undyed kerosene, or other fuels (including alternative fuel) used for farming purposes. How do i amend my tax return online However, see Custom application of fertilizer and pesticide, next. How do i amend my tax return online Also see Dyed Diesel Fuel and Dyed Kerosene, later. How do i amend my tax return online Example. How do i amend my tax return online Farm owner Haleigh Blue hired custom operator Tyler Steele to cultivate the soil on her farm. How do i amend my tax return online Tyler used 200 gallons of undyed diesel fuel that he purchased to perform the work on Haleigh's farm. How do i amend my tax return online In addition, Haleigh hired contractor Lee Brown to pack and store her apple crop. How do i amend my tax return online Lee bought 25 gallons of undyed diesel fuel to use in packing the apples. How do i amend my tax return online Haleigh can claim the credit for the 200 gallons of undyed diesel fuel used by Tyler on her farm because it qualifies as fuel used on the farm for farming purposes. How do i amend my tax return online No one can claim a credit for the 25 gallons used by Lee because that fuel was not used for a farming purpose included in list items (1) or (2), above. How do i amend my tax return online In the above example, both Tyler Steele and Lee Brown could have purchased dyed (untaxed) diesel fuel for their tasks. How do i amend my tax return online Custom application of fertilizer and pesticide. How do i amend my tax return online   Fuel used on a farm for farming purposes includes fuel used in the application (including aerial application) of fertilizer, pesticides, or other substances. How do i amend my tax return online Generally, the applicator is treated as having used the fuel on a farm for farming purposes. How do i amend my tax return online For applicators using highway vehicles, only the fuel used on the farm is exempt. How do i amend my tax return online Fuel used traveling on the highway to and from the farm is taxable. How do i amend my tax return online Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as used for a farming purpose. How do i amend my tax return online For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. How do i amend my tax return online For kerosene used in aviation, the ultimate purchaser may make the claim or waive the right to make the claim to the registered ultimate vendor. How do i amend my tax return online A sample waiver is included as Model Waiver L in the appendix of Publication 510. How do i amend my tax return online A registered ultimate vendor is the person who sells undyed diesel fuel, undyed kerosene, or kerosene for use in aviation to the user (ultimate purchaser) of the fuel for use on a farm for farming purposes. How do i amend my tax return online To claim a credit or refund of tax, the ultimate vendor must be registered with the Internal Revenue Service at the time the claim is made. How do i amend my tax return online However, registered ultimate vendors cannot make claims for undyed diesel fuel and undyed kerosene sold for use on a farm for farming purposes. How do i amend my tax return online Fuel not used for farming. How do i amend my tax return online   You do not use fuel on a farm for farming purposes when you use it in any of the following ways. How do i amend my tax return online Off the farm, such as on the highway or in noncommercial aviation, even if the fuel is used in transporting livestock, feed, crops, or equipment. How do i amend my tax return online For personal use, such as lawn mowing. How do i amend my tax return online In processing, packaging, freezing, or canning operations. How do i amend my tax return online In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. How do i amend my tax return online All-terrain vehicles (ATVs). How do i amend my tax return online   Fuel used in ATVs on a farm for farming purposes, discussed earlier, is eligible for a credit or refund of excise taxes on the fuel. How do i amend my tax return online Fuel used in ATVs for nonfarming purposes is not eligible for a credit or refund of the taxes. How do i amend my tax return online If ATVs are used both for farming and nonfarming purposes, only that portion of the fuel used for farming purposes is eligible for the credit or refund. How do i amend my tax return online Dyed Diesel Fuel and Dyed Kerosene If you purchase dyed diesel fuel or dyed kerosene for a nontaxable use, you must use it only on a farm for farming purposes or for other nontaxable purposes. How do i amend my tax return online For example, you should not use dyed diesel fuel in a truck that is used both on the farm for farming purposes and on the highway, even though the highway use is in connection with farm business. How do i amend my tax return online Excise tax applies to the fuel used by the truck on the highways. How do i amend my tax return online In this situation, undyed (taxed) fuel should be purchased for the truck. How do i amend my tax return online You should keep fuel records of the use of the truck on the farm for farming purposes, and for other uses. How do i amend my tax return online You may be eligible for a credit or refund for the excise tax on fuel used on the farm for farming purposes. How do i amend my tax return online Penalty. How do i amend my tax return online   A penalty is imposed on any person who knowingly uses, sells, or alters dyed diesel fuel or dyed kerosene for any purpose other than a nontaxable use. How do i amend my tax return online The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. How do i amend my tax return online After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. How do i amend my tax return online For more information on this penalty, see Publication 510. How do i amend my tax return online Fuels Used in Off-Highway Business Use You may be eligible to claim a credit or refund for the excise tax on fuel used in an off-highway business use. How do i amend my tax return online Off-highway business use. How do i amend my tax return online   This is any use of fuel in a trade or business or in an income-producing activity. How do i amend my tax return online The use must not be in a highway vehicle registered or required to be registered for use on public highways. How do i amend my tax return online Off-highway business use generally does not include any use in a recreational motorboat. How do i amend my tax return online Examples. How do i amend my tax return online   Off-highway business use includes the use of fuels in a trade or business in any of the following ways. How do i amend my tax return online In stationary machines such as generators, compressors, power saws, and similar equipment; For cleaning ; and In forklift trucks, bulldozers, and earthmovers. How do i amend my tax return online   Off-highway nonbusiness (taxable) use of fuel includes: use in minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. How do i amend my tax return online For more information, see Publication 510. How do i amend my tax return online Fuels Used for Household Purposes or Other Than as a Fuel for Propulsion Engines You may be eligible to claim a credit or refund for the excise tax on undyed diesel fuel or kerosene used for home heating, lighting, and cooking. How do i amend my tax return online This also applies to diesel fuel and kerosene used in a home generator to produce electricity for home use. How do i amend my tax return online Home use of a fuel does not include use in a propulsion engine and it is not considered an off-highway business use. How do i amend my tax return online How To Claim a Credit or Refund You may be able to claim a credit or refund of the excise tax on fuels you use for nontaxable uses. How do i amend my tax return online The basic rules for claiming credits and refunds are listed in Table 14-2 . How do i amend my tax return online Table 14-2. How do i amend my tax return online Claiming a Credit or Refund of Excise Taxes This table gives the basic rules for claiming a credit or refund of excise taxes on fuels used for a nontaxable use. How do i amend my tax return online   Credit Refund Which form to use Form 4136, Credit for Federal Tax Paid on Fuels Form 8849, Claim for Refund of Excise Taxes, and Schedule 1 (Form 8849), Nontaxable Use of Fuels Type of form Annual Quarterly When to file With your income tax return By the last day of the quarter following the last quarter included in the claim Amount of tax Any amount $750 or more1 1You may carry over an amount less than $750 to the next quarter. How do i amend my tax return online Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. How do i amend my tax return online You do not have to use any special form, but the records should establish the following information. How do i amend my tax return online The total number of gallons bought and used during the period covered by your claim. How do i amend my tax return online The dates of the purchases. How do i amend my tax return online The names and addresses of suppliers and amounts bought from each during the period covered by your claim. How do i amend my tax return online The nontaxable use for which you used the fuel. How do i amend my tax return online The number of gallons used for each nontaxable use. How do i amend my tax return online It is important that your records separately show the number of gallons used for each nontaxable use that qualifies as a claim. How do i amend my tax return online For more information about recordkeeping, see Publication 583, Starting a Business and Keeping Records. How do i amend my tax return online Credit or refund. How do i amend my tax return online   A credit is an amount that reduces the tax on your income tax return when you file it at the end of the year. How do i amend my tax return online If you meet certain requirements, you may claim a refund during the year instead of waiting until you file your income tax return. How do i amend my tax return online Credit only. How do i amend my tax return online   You can claim the following taxes only as a credit on your income tax return. How do i amend my tax return online Tax on gasoline and aviation gasoline you used on a farm for farming purposes. How do i amend my tax return online Tax on fuels (including undyed diesel fuel or undyed kerosene) you used for nontaxable uses if the total for the tax year is less than $750. How do i amend my tax return online Tax on fuel you did not include in any claim for refund previously filed for any quarter of the tax year. How do i amend my tax return online Claiming a Credit You make a claim for a fuel tax credit on Form 4136 and attach it to your income tax return. How do i amend my tax return online Do not claim a credit for any excise tax for which you have filed a refund claim. How do i amend my tax return online How to claim a credit. How do i amend my tax return online   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, trust, or farmers' cooperative association. How do i amend my tax return online Individuals. How do i amend my tax return online   You claim the credit on the “Credit for federal tax on fuels” line of your Form 1040. How do i amend my tax return online If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. How do i amend my tax return online Partnership. How do i amend my tax return online   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How do i amend my tax return online , showing each partner's share of the number of gallons of each fuel sold or used for a nontaxable use, the type of use, and the applicable credit per gallon. How do i amend my tax return online Each partner claims the credit on his or her income tax return for the partner's share of the fuel used by the partnership. How do i amend my tax return online An electing large partnership can claim the credit on the “Other payments” line of Form 1065-B, U. How do i amend my tax return online S. How do i amend my tax return online Return of Income for Electing Large Partnerships. How do i amend my tax return online Other entities. How do i amend my tax return online   Corporations, S corporations, farmers' cooperative associations, and trusts make the claim on the appropriate line of their income tax return. How do i amend my tax return online When to claim a credit. How do i amend my tax return online   You can claim a fuel tax credit on your income tax return for the year you used the fuel. How do i amend my tax return online You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. How do i amend my tax return online A claim for credit or refund of an overpayment must generally be filed within the later of: Three years from the date the original return was filed, or Two years from the date the tax was paid. How do i amend my tax return online Claiming a Refund Generally, you may claim a refund of excise taxes on Form 8849. How do i amend my tax return online Complete and attach to Form 8849 the appropriate Form 8849 schedule(s). How do i amend my tax return online The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. How do i amend my tax return online If you file Form 720, you can use its Schedule C for your refund claims for the quarter. How do i amend my tax return online See the Instructions for Form 720. How do i amend my tax return online Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Form 720 or Form 4136. How do i amend my tax return online You may file a claim for refund for any quarter of your tax year for which you can claim $750 or more. How do i amend my tax return online This amount is the excise tax on all fuels used for a nontaxable use during that quarter or any prior quarter (for which no other claim has been filed) during the tax year. How do i amend my tax return online If you cannot claim at least $750 at the end of a quarter, you carry the amount over to the next quarter of your tax year to determine if you can claim at least $750 for that quarter. How do i amend my tax return online If you cannot claim at least $750 at the end of the fourth quarter of your tax year, you must claim a credit on your income tax return using Form 4136. How do i amend my tax return online Only one claim can be filed for a quarter. How do i amend my tax return online You cannot claim a refund for excise tax on gasoline and aviation gasoline used on a farm for farming purposes. How do i amend my tax return online You must claim a credit on your income tax return for the tax. How do i amend my tax return online How to file a quarterly claim. How do i amend my tax return online   File the claim for refund by filling out Schedule 1 (Form 8849) and attaching it to Form 8849. How do i amend my tax return online Send it to the address shown in the instructions. How do i amend my tax return online If you file Form 720, you can use its Schedule C for your refund claims. How do i amend my tax return online See the Instructions for Form 720. How do i amend my tax return online When to file a quarterly claim. How do i amend my tax return online   You must file a quarterly claim by the last day of the first quarter following the last quarter included in the claim. How do i amend my tax return online If you do not file a timely refund claim for the fourth quarter of your tax year, you will have to claim a credit for that amount on your income tax return, as discussed earlier. How do i amend my tax return online    In most situations, the amount claimed as a credit or refund will be less than the amount deducted as fuel tax expense because the Leaking Underground Storage Tank (LUST) tax of $0. How do i amend my tax return online 001 per gallon is generally not subject to credit or refund. How do i amend my tax return online Including the Credit or Refund in Income Include any credit or refund of excise taxes on fuels in your gross income if you claimed the total cost of the fuel (including the excise taxes) as an expense deduction that reduced your income tax liability. How do i amend my tax return online Which year you include a credit or refund in gross income depends on whether you use the cash or an accrual method of accounting. How do i amend my tax return online Cash method. How do i amend my tax return online   If you use the cash method and file a claim for refund, include the refund amount in gross income for the tax year in which you receive the refund. How do i amend my tax return online If you claim a credit on your income tax return, include the credit amount in gross income for the tax year in which you file Form 4136. How do i amend my tax return online If you file an amended return and claim a credit, include the credit amount in gross income for the tax year in which you receive the credit. How do i amend my tax return online Example. How do i amend my tax return online Sharon Brown, a farmer who uses the cash method, filed her 2012 Form 1040 on March 3, 2013. How do i amend my tax return online On her Schedule F, she deducted the total cost of gasoline (including $110 of excise taxes) used on the farm for farming purposes. How do i amend my tax return online Then, on Form 4136, she claimed the $110 as a credit. How do i amend my tax return online Sharon reports the $110 as other income on line 8b of her 2013 Schedule F. How do i amend my tax return online Accrual method. How do i amend my tax return online   If you use an accrual method, include the amount of credit or refund in gross income for the tax year in which you used the fuels. How do i amend my tax return online It does not matter whether you filed for a quarterly refund or claimed the entire amount as a credit. How do i amend my tax return online Example. How do i amend my tax return online Patty Green, a farmer who uses the accrual method, files her 2012 Form 1040 on April 15, 2013. How do i amend my tax return online On Schedule F, she deducts the total cost of gasoline (including $155 of excise taxes) she used on the farm for farming purposes during 2012. How do i amend my tax return online On Form 4136, Patty claims the $155 as a credit. How do i amend my tax return online She reports the $155 as other income on line 8b of her 2012 Schedule F. How do i amend my tax return online Prev  Up  Next   Home   More Online Publications