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Tax Forms 2008

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Tax Forms 2008

Tax forms 2008 9. Tax forms 2008   Depletion Table of Contents Introduction Topics - This chapter discusses: Who Can Claim Depletion? Mineral PropertyCost Depletion Percentage Depletion Oil and Gas Wells Mines and Geothermal Deposits Lessor's Gross Income TimberTimber units. Tax forms 2008 Depletion unit. Tax forms 2008 Introduction Depletion is the using up of natural resources by mining, drilling, quarrying stone, or cutting timber. Tax forms 2008 The depletion deduction allows an owner or operator to account for the reduction of a product's reserves. Tax forms 2008 There are two ways of figuring depletion: cost depletion and percentage depletion. Tax forms 2008 For mineral property, you generally must use the method that gives you the larger deduction. Tax forms 2008 For standing timber, you must use cost depletion. Tax forms 2008 Topics - This chapter discusses: Who can claim depletion Mineral property Timber Who Can Claim Depletion? If you have an economic interest in mineral property or standing timber, you can take a deduction for depletion. Tax forms 2008 More than one person can have an economic interest in the same mineral deposit or timber. Tax forms 2008 In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Tax forms 2008 You have an economic interest if both the following apply. Tax forms 2008 You have acquired by investment any interest in mineral deposits or standing timber. Tax forms 2008 You have a legal right to income from the extraction of the mineral or cutting of the timber to which you must look for a return of your capital investment. Tax forms 2008 A contractual relationship that allows you an economic or monetary advantage from products of the mineral deposit or standing timber is not, in itself, an economic interest. Tax forms 2008 A production payment carved out of, or retained on the sale of, mineral property is not an economic interest. Tax forms 2008 Individuals, corporations, estates, and trusts who claim depletion deductions may be liable for alternative minimum tax. Tax forms 2008 Basis adjustment for depletion. Tax forms 2008   You must reduce the basis of your property by the depletion allowed or allowable, whichever is greater. Tax forms 2008 Mineral Property Mineral property includes oil and gas wells, mines, and other natural deposits (including geothermal deposits). Tax forms 2008 For this purpose, the term “property” means each separate interest you own in each mineral deposit in each separate tract or parcel of land. Tax forms 2008 You can treat two or more separate interests as one property or as separate properties. Tax forms 2008 See section 614 of the Internal Revenue Code and the related regulations for rules on how to treat separate mineral interests. Tax forms 2008 There are two ways of figuring depletion on mineral property. Tax forms 2008 Cost depletion. Tax forms 2008 Percentage depletion. Tax forms 2008 Generally, you must use the method that gives you the larger deduction. Tax forms 2008 However, unless you are an independent producer or royalty owner, you generally cannot use percentage depletion for oil and gas wells. Tax forms 2008 See Oil and Gas Wells , later. Tax forms 2008 Cost Depletion To figure cost depletion you must first determine the following. Tax forms 2008 The property's basis for depletion. Tax forms 2008 The total recoverable units of mineral in the property's natural deposit. Tax forms 2008 The number of units of mineral sold during the tax year. Tax forms 2008 Basis for depletion. Tax forms 2008   To figure the property's basis for depletion, subtract all the following from the property's adjusted basis. Tax forms 2008 Amounts recoverable through: Depreciation deductions, Deferred expenses (including deferred exploration and development costs), and Deductions other than depletion. Tax forms 2008 The residual value of land and improvements at the end of operations. Tax forms 2008 The cost or value of land acquired for purposes other than mineral production. Tax forms 2008 Adjusted basis. Tax forms 2008   The adjusted basis of your property is your original cost or other basis, plus certain additions and improvements, and minus certain deductions such as depletion allowed or allowable and casualty losses. Tax forms 2008 Your adjusted basis can never be less than zero. Tax forms 2008 See Publication 551, Basis of Assets, for more information on adjusted basis. Tax forms 2008 Total recoverable units. Tax forms 2008   The total recoverable units is the sum of the following. Tax forms 2008 The number of units of mineral remaining at the end of the year (including units recovered but not sold). Tax forms 2008 The number of units of mineral sold during the tax year (determined under your method of accounting, as explained next). Tax forms 2008   You must estimate or determine recoverable units (tons, pounds, ounces, barrels, thousands of cubic feet, or other measure) of mineral products using the current industry method and the most accurate and reliable information you can obtain. Tax forms 2008 You must include ores and minerals that are developed, in sight, blocked out, or assured. Tax forms 2008 You must also include probable or prospective ores or minerals that are believed to exist based on good evidence. Tax forms 2008 But see Elective safe harbor for owners of oil and gas property , later. Tax forms 2008 Number of units sold. Tax forms 2008   You determine the number of units sold during the tax year based on your method of accounting. Tax forms 2008 Use the following table to make this determination. Tax forms 2008    IF you  use . Tax forms 2008 . Tax forms 2008 . Tax forms 2008 THEN the units sold during the year are . Tax forms 2008 . Tax forms 2008 . Tax forms 2008 The cash method of accounting The units sold for which you receive payment during the tax year (regardless of the year of sale). Tax forms 2008 An accrual method of accounting The units sold based on your inventories and method of accounting for inventory. Tax forms 2008   The number of units sold during the tax year does not include any for which depletion deductions were allowed or allowable in earlier years. Tax forms 2008 Figuring the cost depletion deduction. Tax forms 2008   Once you have figured your property's basis for depletion, the total recoverable units, and the number of units sold during the tax year, you can figure your cost depletion deduction by taking the following steps. Tax forms 2008 Step Action Result 1 Divide your property's basis for depletion by total recoverable units. Tax forms 2008 Rate per unit. Tax forms 2008 2 Multiply the rate per unit by units sold during the tax year. Tax forms 2008 Cost depletion deduction. Tax forms 2008 You must keep accounts for the depletion of each property and adjust these accounts each year for units sold and depletion claimed. Tax forms 2008 Elective safe harbor for owners of oil and gas property. Tax forms 2008   Instead of using the method described earlier to determine the total recoverable units, you can use an elective safe harbor. Tax forms 2008 If you choose the elective safe harbor, the total recoverable units equal 105% of a property's proven reserves (both developed and undeveloped). Tax forms 2008 For details, see Revenue Procedure 2004-19 on page 563 of Internal Revenue Bulletin 2004-10, available at www. Tax forms 2008 irs. Tax forms 2008 gov/pub/irs-irbs/irb04-10. Tax forms 2008 pdf. Tax forms 2008   To make the election, attach a statement to your timely filed (including extensions) original return for the first tax year for which the safe harbor is elected. Tax forms 2008 The statement must indicate that you are electing the safe harbor provided by Revenue Procedure 2004-19. Tax forms 2008 The election, if made, is effective for the tax year in which it is made and all later years. Tax forms 2008 It cannot be revoked for the tax year in which it is elected, but may be revoked in a later year. Tax forms 2008 Once revoked, it cannot be re-elected for the next 5 years. Tax forms 2008 Percentage Depletion To figure percentage depletion, you multiply a certain percentage, specified for each mineral, by your gross income from the property during the tax year. Tax forms 2008 The rates to be used and other rules for oil and gas wells are discussed later under Independent Producers and Royalty Owners and under Natural Gas Wells . Tax forms 2008 Rates and other rules for percentage depletion of other specific minerals are found later in Mines and Geothermal Deposits . Tax forms 2008 Gross income. Tax forms 2008   When figuring percentage depletion, subtract from your gross income from the property the following amounts. Tax forms 2008 Any rents or royalties you paid or incurred for the property. Tax forms 2008 The part of any bonus you paid for a lease on the property allocable to the product sold (or that otherwise gives rise to gross income) for the tax year. Tax forms 2008 A bonus payment includes amounts you paid as a lessee to satisfy a production payment retained by the lessor. Tax forms 2008   Use the following fraction to figure the part of the bonus you must subtract. Tax forms 2008 No. Tax forms 2008 of units sold in the tax year Recoverable units from the property × Bonus Payments For oil and gas wells and geothermal deposits, more information about the definition of gross income from the property is under Oil and Gas Wells , later. Tax forms 2008 For other property, more information about the definition of gross income from the property is under Mines and Geothermal Deposits , later. Tax forms 2008 Taxable income limit. Tax forms 2008   The percentage depletion deduction generally cannot be more than 50% (100% for oil and gas property) of your taxable income from the property figured without the depletion deduction and the domestic production activities deduction. Tax forms 2008   Taxable income from the property means gross income from the property minus all allowable deductions (except any deduction for depletion or domestic production activities) attributable to mining processes, including mining transportation. Tax forms 2008 These deductible items include, but are not limited to, the following. Tax forms 2008 Operating expenses. Tax forms 2008 Certain selling expenses. Tax forms 2008 Administrative and financial overhead. Tax forms 2008 Depreciation. Tax forms 2008 Intangible drilling and development costs. Tax forms 2008 Exploration and development expenditures. Tax forms 2008 Deductible taxes (see chapter 5), but not taxes that you capitalize or take as a credit. Tax forms 2008 Losses sustained. Tax forms 2008   The following rules apply when figuring your taxable income from the property for purposes of the taxable income limit. Tax forms 2008 Do not deduct any net operating loss deduction from the gross income from the property. Tax forms 2008 Corporations do not deduct charitable contributions from the gross income from the property. Tax forms 2008 If, during the year, you dispose of an item of section 1245 property that was used in connection with mineral property, reduce any allowable deduction for mining expenses by the part of any gain you must report as ordinary income that is allocable to the mineral property. Tax forms 2008 See section 1. Tax forms 2008 613-5(b)(1) of the regulations for information on how to figure the ordinary gain allocable to the property. Tax forms 2008 Oil and Gas Wells You cannot claim percentage depletion for an oil or gas well unless at least one of the following applies. Tax forms 2008 You are either an independent producer or a royalty owner. Tax forms 2008 The well produces natural gas that is either sold under a fixed contract or produced from geopressured brine. Tax forms 2008 If you are an independent producer or royalty owner, see Independent Producers and Royalty Owners , next. Tax forms 2008 For information on the depletion deduction for wells that produce natural gas that is either sold under a fixed contract or produced from geopressured brine, see Natural Gas Wells , later. Tax forms 2008 Independent Producers and Royalty Owners If you are an independent producer or royalty owner, you figure percentage depletion using a rate of 15% of the gross income from the property based on your average daily production of domestic crude oil or domestic natural gas up to your depletable oil or natural gas quantity. Tax forms 2008 However, certain refiners, as explained next, and certain retailers and transferees of proven oil and gas properties, as explained next, cannot claim percentage depletion. Tax forms 2008 For information on figuring the deduction, see Figuring percentage depletion , later. Tax forms 2008 Refiners who cannot claim percentage depletion. Tax forms 2008   You cannot claim percentage depletion if you or a related person refine crude oil and you and the related person refined more than 75,000 barrels on any day during the tax year based on average (rather than actual) daily refinery runs for the tax year. Tax forms 2008 The average daily refinery run is computed by dividing total refinery runs for the tax year by the total number of days in the tax year. Tax forms 2008 Related person. Tax forms 2008   You and another person are related persons if either of you holds a significant ownership interest in the other person or if a third person holds a significant ownership interest in both of you. Tax forms 2008 For example, a corporation, partnership, estate, or trust and anyone who holds a significant ownership interest in it are related persons. Tax forms 2008 A partnership and a trust are related persons if one person holds a significant ownership interest in each of them. Tax forms 2008 For purposes of the related person rules, significant ownership interest means direct or indirect ownership of 5% or more in any one of the following. Tax forms 2008 The value of the outstanding stock of a corporation. Tax forms 2008 The interest in the profits or capital of a partnership. Tax forms 2008 The beneficial interests in an estate or trust. Tax forms 2008 Any interest owned by or for a corporation, partnership, trust, or estate is considered to be owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries. Tax forms 2008 Retailers who cannot claim percentage depletion. Tax forms 2008   You cannot claim percentage depletion if both the following apply. Tax forms 2008 You sell oil or natural gas or their by-products directly or through a related person in any of the following situations. Tax forms 2008 Through a retail outlet operated by you or a related person. Tax forms 2008 To any person who is required under an agreement with you or a related person to use a trademark, trade name, or service mark or name owned by you or a related person in marketing or distributing oil, natural gas, or their by-products. Tax forms 2008 To any person given authority under an agreement with you or a related person to occupy any retail outlet owned, leased, or controlled by you or a related person. Tax forms 2008 The combined gross receipts from sales (not counting resales) of oil, natural gas, or their by-products by all retail outlets taken into account in (1) are more than $5 million for the tax year. Tax forms 2008   For the purpose of determining if this rule applies, do not count the following. Tax forms 2008 Bulk sales (sales in very large quantities) of oil or natural gas to commercial or industrial users. Tax forms 2008 Bulk sales of aviation fuels to the Department of Defense. Tax forms 2008 Sales of oil or natural gas or their by-products outside the United States if none of your domestic production or that of a related person is exported during the tax year or the prior tax year. Tax forms 2008 Related person. Tax forms 2008   To determine if you and another person are related persons, see Related person under Refiners who cannot claim percentage depletion, earlier. Tax forms 2008 Sales through a related person. Tax forms 2008   You are considered to be selling through a related person if any sale by the related person produces gross income from which you may benefit because of your direct or indirect ownership interest in the person. Tax forms 2008   You are not considered to be selling through a related person who is a retailer if all the following apply. Tax forms 2008 You do not have a significant ownership interest in the retailer. Tax forms 2008 You sell your production to persons who are not related to either you or the retailer. Tax forms 2008 The retailer does not buy oil or natural gas from your customers or persons related to your customers. Tax forms 2008 There are no arrangements for the retailer to acquire oil or natural gas you produced for resale or made available for purchase by the retailer. Tax forms 2008 Neither you nor the retailer knows of or controls the final disposition of the oil or natural gas you sold or the original source of the petroleum products the retailer acquired for resale. Tax forms 2008 Transferees who cannot claim percentage depletion. Tax forms 2008   You cannot claim percentage depletion if you received your interest in a proven oil or gas property by transfer after 1974 and before October 12, 1990. Tax forms 2008 For a definition of the term “transfer,” see section 1. Tax forms 2008 613A-7(n) of the regulations. Tax forms 2008 For a definition of the term “interest in proven oil or gas property,” see section 1. Tax forms 2008 613A-7(p) of the regulations. Tax forms 2008 Figuring percentage depletion. Tax forms 2008   Generally, as an independent producer or royalty owner, you figure your percentage depletion by computing your average daily production of domestic oil or gas and comparing it to your depletable oil or gas quantity. Tax forms 2008 If your average daily production does not exceed your depletable oil or gas quantity, you figure your percentage depletion by multiplying the gross income from the oil or gas property (defined later) by 15%. Tax forms 2008 If your average daily production of domestic oil or gas exceeds your depletable oil or gas quantity, you must make an allocation as explained later under Average daily production. Tax forms 2008   In addition, there is a limit on the percentage depletion deduction. Tax forms 2008 See Taxable income limit , later. Tax forms 2008 Average daily production. Tax forms 2008   Figure your average daily production by dividing your total domestic production of oil or gas for the tax year by the number of days in your tax year. Tax forms 2008 Partial interest. Tax forms 2008   If you have a partial interest in the production from a property, figure your share of the production by multiplying total production from the property by your percentage of interest in the revenues from the property. Tax forms 2008   You have a partial interest in the production from a property if you have a net profits interest in the property. Tax forms 2008 To figure the share of production for your net profits interest, you must first determine your percentage participation (as measured by the net profits) in the gross revenue from the property. Tax forms 2008 To figure this percentage, you divide the income you receive for your net profits interest by the gross revenue from the property. Tax forms 2008 Then multiply the total production from the property by your percentage participation to figure your share of the production. Tax forms 2008 Example. Tax forms 2008 Javier Robles owns oil property in which Pablo Olmos owns a 20% net profits interest. Tax forms 2008 During the year, the property produced 10,000 barrels of oil, which Javier sold for $200,000. Tax forms 2008 Javier had expenses of $90,000 attributable to the property. Tax forms 2008 The property generated a net profit of $110,000 ($200,000 − $90,000). Tax forms 2008 Pablo received income of $22,000 ($110,000 × . Tax forms 2008 20) for his net profits interest. Tax forms 2008 Pablo determined his percentage participation to be 11% by dividing $22,000 (the income he received) by $200,000 (the gross revenue from the property). Tax forms 2008 Pablo determined his share of the oil production to be 1,100 barrels (10,000 barrels × 11%). Tax forms 2008 Depletable oil or natural gas quantity. Tax forms 2008   Generally, your depletable oil quantity is 1,000 barrels. Tax forms 2008 Your depletable natural gas quantity is 6,000 cubic feet multiplied by the number of barrels of your depletable oil quantity that you choose to apply. Tax forms 2008 If you claim depletion on both oil and natural gas, you must reduce your depletable oil quantity (1,000 barrels) by the number of barrels you use to figure your depletable natural gas quantity. Tax forms 2008 Example. Tax forms 2008 You have both oil and natural gas production. Tax forms 2008 To figure your depletable natural gas quantity, you choose to apply 360 barrels of your 1000-barrel depletable oil quantity. Tax forms 2008 Your depletable natural gas quantity is 2. Tax forms 2008 16 million cubic feet of gas (360 × 6000). Tax forms 2008 You must reduce your depletable oil quantity to 640 barrels (1000 − 360). Tax forms 2008 If you have production from marginal wells, see section 613A(c)(6) of the Internal Revenue Code to figure your depletable oil or natural gas quantity. Tax forms 2008 Also, see Notice 2012-50, available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2012–31_IRB/index. Tax forms 2008 html. Tax forms 2008 Business entities and family members. Tax forms 2008   You must allocate the depletable oil or gas quantity among the following related persons in proportion to each entity's or family member's production of domestic oil or gas for the year. Tax forms 2008 Corporations, trusts, and estates if 50% or more of the beneficial interest is owned by the same or related persons (considering only persons that own at least 5% of the beneficial interest). Tax forms 2008 You and your spouse and minor children. Tax forms 2008 A related person is anyone mentioned in the related persons discussion under Nondeductible loss in chapter 2 of Publication 544, except that for purposes of this allocation, item (1) in that discussion includes only an individual, his or her spouse, and minor children. Tax forms 2008 Controlled group of corporations. Tax forms 2008   Members of the same controlled group of corporations are treated as one taxpayer when figuring the depletable oil or natural gas quantity. Tax forms 2008 They share the depletable quantity. Tax forms 2008 A controlled group of corporations is defined in section 1563(a) of the Internal Revenue Code, except that, for this purpose, the stock ownership requirement in that definition is “more than 50%” rather than “at least 80%. Tax forms 2008 ” Gross income from the property. Tax forms 2008   For purposes of percentage depletion, gross income from the property (in the case of oil and gas wells) is the amount you receive from the sale of the oil or gas in the immediate vicinity of the well. Tax forms 2008 If you do not sell the oil or gas on the property, but manufacture or convert it into a refined product before sale or transport it before sale, the gross income from the property is the representative market or field price (RMFP) of the oil or gas, before conversion or transportation. Tax forms 2008   If you sold gas after you removed it from the premises for a price that is lower than the RMFP, determine gross income from the property for percentage depletion purposes without regard to the RMFP. Tax forms 2008   Gross income from the property does not include lease bonuses, advance royalties, or other amounts payable without regard to production from the property. Tax forms 2008 Average daily production exceeds depletable quantities. Tax forms 2008   If your average daily production for the year is more than your depletable oil or natural gas quantity, figure your allowance for depletion for each domestic oil or natural gas property as follows. Tax forms 2008 Figure your average daily production of oil or natural gas for the year. Tax forms 2008 Figure your depletable oil or natural gas quantity for the year. Tax forms 2008 Figure depletion for all oil or natural gas produced from the property using a percentage depletion rate of 15%. Tax forms 2008 Multiply the result figured in (3) by a fraction, the numerator of which is the result figured in (2) and the denominator of which is the result figured in (1). Tax forms 2008 This is your depletion allowance for that property for the year. Tax forms 2008 Taxable income limit. Tax forms 2008   If you are an independent producer or royalty owner of oil and gas, your deduction for percentage depletion is limited to the smaller of the following. Tax forms 2008 100% of your taxable income from the property figured without the deduction for depletion and the deduction for domestic production activities under section 199 of the Internal Revenue Code. Tax forms 2008 For a definition of taxable income from the property, see Taxable income limit , earlier, under Mineral Property. Tax forms 2008 65% of your taxable income from all sources, figured without the depletion allowance, the deduction for domestic production activities, any net operating loss carryback, and any capital loss carryback. Tax forms 2008 You can carry over to the following year any amount you cannot deduct because of the 65%-of-taxable-income limit. Tax forms 2008 Add it to your depletion allowance (before applying any limits) for the following year. Tax forms 2008 Partnerships and S Corporations Generally, each partner or S corporation shareholder, and not the partnership or S corporation, figures the depletion allowance separately. Tax forms 2008 (However, see Electing large partnerships must figure depletion allowance , later. Tax forms 2008 ) Each partner or shareholder must decide whether to use cost or percentage depletion. Tax forms 2008 If a partner or shareholder uses percentage depletion, he or she must apply the 65%-of-taxable-income limit using his or her taxable income from all sources. Tax forms 2008 Partner's or shareholder's adjusted basis. Tax forms 2008   The partnership or S corporation must allocate to each partner or shareholder his or her share of the adjusted basis of each oil or gas property held by the partnership or S corporation. Tax forms 2008 The partnership or S corporation makes the allocation as of the date it acquires the oil or gas property. Tax forms 2008   Each partner's share of the adjusted basis of the oil or gas property generally is figured according to that partner's interest in partnership capital. Tax forms 2008 However, in some cases, it is figured according to the partner's interest in partnership income. Tax forms 2008   The partnership or S corporation adjusts the partner's or shareholder's share of the adjusted basis of the oil and gas property for any capital expenditures made for the property and for any change in partnership or S corporation interests. Tax forms 2008 Recordkeeping. Tax forms 2008 Each partner or shareholder must separately keep records of his or her share of the adjusted basis in each oil and gas property of the partnership or S corporation. Tax forms 2008 The partner or shareholder must reduce his or her adjusted basis by the depletion allowed or allowable on the property each year. Tax forms 2008 The partner or shareholder must use that reduced adjusted basis to figure cost depletion or his or her gain or loss if the partnership or S corporation disposes of the property. Tax forms 2008 Reporting the deduction. Tax forms 2008   Information that you, as a partner or shareholder, use to figure your depletion deduction on oil and gas properties is reported by the partnership or S corporation on Schedule K-1 (Form 1065) or on Schedule K-1 (Form 1120S). Tax forms 2008 Deduct oil and gas depletion for your partnership or S corporation interest on Schedule E (Form 1040). Tax forms 2008 The depletion deducted on Schedule E is included in figuring income or loss from rental real estate or royalty properties. Tax forms 2008 The instructions for Schedule E explain where to report this income or loss and whether you need to file either of the following forms. Tax forms 2008 Form 6198, At-Risk Limitations. Tax forms 2008 Form 8582, Passive Activity Loss Limitations. Tax forms 2008 Electing large partnerships must figure depletion allowance. Tax forms 2008   An electing large partnership, rather than each partner, generally must figure the depletion allowance. Tax forms 2008 The partnership figures the depletion allowance without taking into account the 65-percent-of-taxable-income limit and the depletable oil or natural gas quantity. Tax forms 2008 Also, the adjusted basis of a partner's interest in the partnership is not affected by the depletion allowance. Tax forms 2008   An electing large partnership is one that meets both the following requirements. Tax forms 2008 The partnership had 100 or more partners in the preceding year. Tax forms 2008 The partnership chooses to be an electing large partnership. Tax forms 2008 Disqualified persons. Tax forms 2008   An electing large partnership does not figure the depletion allowance of its partners that are disqualified persons. Tax forms 2008 Disqualified persons must figure it themselves, as explained earlier. Tax forms 2008   All the following are disqualified persons. Tax forms 2008 Refiners who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Tax forms 2008 Retailers who cannot claim percentage depletion (discussed under Independent Producers and Royalty Owners , earlier). Tax forms 2008 Any partner whose average daily production of domestic crude oil and natural gas is more than 500 barrels during the tax year in which the partnership tax year ends. Tax forms 2008 Average daily production is discussed earlier. Tax forms 2008 Natural Gas Wells You can use percentage depletion for a well that produces natural gas that is either Sold under a fixed contract, or Produced from geopressured brine. Tax forms 2008 Natural gas sold under a fixed contract. Tax forms 2008   Natural gas sold under a fixed contract qualifies for a percentage depletion rate of 22%. Tax forms 2008 This is domestic natural gas sold by the producer under a contract that does not provide for a price increase to reflect any increase in the seller's tax liability because of the repeal of percentage depletion for gas. Tax forms 2008 The contract must have been in effect from February 1, 1975, until the date of sale of the gas. Tax forms 2008 Price increases after February 1, 1975, are presumed to take the increase in tax liability into account unless demonstrated otherwise by clear and convincing evidence. Tax forms 2008 Natural gas from geopressured brine. Tax forms 2008   Qualified natural gas from geopressured brine is eligible for a percentage depletion rate of 10%. Tax forms 2008 This is natural gas that is both the following. Tax forms 2008 Produced from a well you began to drill after September 1978 and before 1984. Tax forms 2008 Determined in accordance with section 503 of the Natural Gas Policy Act of 1978 to be produced from geopressured brine. Tax forms 2008 Mines and Geothermal Deposits Certain mines, wells, and other natural deposits, including geothermal deposits, qualify for percentage depletion. Tax forms 2008 Mines and other natural deposits. Tax forms 2008   For a natural deposit, the percentage of your gross income from the property that you can deduct as depletion depends on the type of deposit. Tax forms 2008   The following is a list of the percentage depletion rates for the more common minerals. Tax forms 2008 DEPOSITS RATE Sulphur, uranium, and, if from deposits in the United States, asbestos, lead ore, zinc ore, nickel ore, and mica 22% Gold, silver, copper, iron ore, and certain oil shale, if from deposits in the United States 15% Borax, granite, limestone, marble, mollusk shells, potash, slate, soapstone, and carbon dioxide produced from a well 14% Coal, lignite, and sodium chloride 10% Clay and shale used or sold for use in making sewer pipe or bricks or used or sold for use as sintered or burned lightweight aggregates 7½% Clay used or sold for use in making drainage and roofing tile, flower pots, and kindred products, and gravel, sand, and stone (other than stone used or sold for use by a mine owner or operator as dimension or ornamental stone) 5%   You can find a complete list of minerals and their percentage depletion rates in section 613(b) of the Internal Revenue Code. Tax forms 2008 Corporate deduction for iron ore and coal. Tax forms 2008   The percentage depletion deduction of a corporation for iron ore and coal (including lignite) is reduced by 20% of: The percentage depletion deduction for the tax year (figured without this reduction), minus The adjusted basis of the property at the close of the tax year (figured without the depletion deduction for the tax year). Tax forms 2008 Gross income from the property. Tax forms 2008   For property other than a geothermal deposit or an oil or gas well, gross income from the property means the gross income from mining. Tax forms 2008 Mining includes all the following. Tax forms 2008 Extracting ores or minerals from the ground. Tax forms 2008 Applying certain treatment processes described later. Tax forms 2008 Transporting ores or minerals (generally, not more than 50 miles) from the point of extraction to the plants or mills in which the treatment processes are applied. Tax forms 2008 Excise tax. Tax forms 2008   Gross income from mining includes the separately stated excise tax received by a mine operator from the sale of coal to compensate the operator for the excise tax the mine operator must pay to finance black lung benefits. Tax forms 2008 Extraction. Tax forms 2008   Extracting ores or minerals from the ground includes extraction by mine owners or operators of ores or minerals from the waste or residue of prior mining. Tax forms 2008 This does not apply to extraction from waste or residue of prior mining by the purchaser of the waste or residue or the purchaser of the rights to extract ores or minerals from the waste or residue. Tax forms 2008 Treatment processes. Tax forms 2008   The processes included as mining depend on the ore or mineral mined. Tax forms 2008 To qualify as mining, the treatment processes must be applied by the mine owner or operator. Tax forms 2008 For a listing of treatment processes considered as mining, see section 613(c)(4) of the Internal Revenue Code and the related regulations. Tax forms 2008 Transportation of more than 50 miles. Tax forms 2008   If the IRS finds that the ore or mineral must be transported more than 50 miles to plants or mills to be treated because of physical and other requirements, the additional authorized transportation is considered mining and included in the computation of gross income from mining. Tax forms 2008    If you wish to include transportation of more than 50 miles in the computation of gross income from mining, request an advance ruling from the IRS. Tax forms 2008 Include in the request the facts about the physical and other requirements that prevented the construction and operation of the plant within 50 miles of the point of extraction. Tax forms 2008 For more information about requesting an advance ruling, see Revenue Procedure 2013-1, available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2013-01_IRB/ar11. Tax forms 2008 html. Tax forms 2008 Disposal of coal or iron ore. Tax forms 2008   You cannot take a depletion deduction for coal (including lignite) or iron ore mined in the United States if both the following apply. Tax forms 2008 You disposed of it after holding it for more than 1 year. Tax forms 2008 You disposed of it under a contract under which you retain an economic interest in the coal or iron ore. Tax forms 2008 Treat any gain on the disposition as a capital gain. Tax forms 2008 Disposal to related person. Tax forms 2008   This rule does not apply if you dispose of the coal or iron ore to one of the following persons. Tax forms 2008 A related person (as listed in chapter 2 of Publication 544). Tax forms 2008 A person owned or controlled by the same interests that own or control you. Tax forms 2008 Geothermal deposits. Tax forms 2008   Geothermal deposits located in the United States or its possessions qualify for a percentage depletion rate of 15%. Tax forms 2008 A geothermal deposit is a geothermal reservoir of natural heat stored in rocks or in a watery liquid or vapor. Tax forms 2008 For percentage depletion purposes, a geothermal deposit is not considered a gas well. Tax forms 2008   Figure gross income from the property for a geothermal steam well in the same way as for oil and gas wells. Tax forms 2008 See Gross income from the property , earlier, under Oil and Gas Wells. Tax forms 2008 Percentage depletion on a geothermal deposit cannot be more than 50% of your taxable income from the property. Tax forms 2008 Lessor's Gross Income In the case of leased property, the depletion deduction is divided between the lessor and the lessee. Tax forms 2008 A lessor's gross income from the property that qualifies for percentage depletion usually is the total of the royalties received from the lease. Tax forms 2008 Bonuses and advanced royalties. Tax forms 2008   Bonuses and advanced royalties are payments a lessee makes before production to a lessor for the grant of rights in a lease or for minerals, gas, or oil to be extracted from leased property. Tax forms 2008 If you are the lessor, your income from bonuses and advanced royalties received is subject to an allowance for depletion, as explained in the next two paragraphs. Tax forms 2008 Figuring cost depletion. Tax forms 2008   To figure cost depletion on a bonus, multiply your adjusted basis in the property by a fraction, the numerator of which is the bonus and the denominator of which is the total bonus and royalties expected to be received. Tax forms 2008 To figure cost depletion on advanced royalties, use the computation explained earlier under Cost Depletion , treating the number of units for which the advanced royalty is received as the number of units sold. Tax forms 2008 Figuring percentage depletion. Tax forms 2008   In the case of mines, wells, and other natural deposits other than gas, oil, or geothermal property, you may use the percentage rates discussed earlier under Mines and Geothermal Deposits . Tax forms 2008 Any bonus or advanced royalty payments are generally part of the gross income from the property to which the rates are applied in making the calculation. Tax forms 2008 However, for oil, gas, or geothermal property, gross income does not include lease bonuses, advanced royalties, or other amounts payable without regard to production from the property. Tax forms 2008 Ending the lease. Tax forms 2008   If you receive a bonus on a lease that ends or is abandoned before you derive any income from mineral extraction, include in income the depletion deduction you took. Tax forms 2008 Do this for the year the lease ends or is abandoned. Tax forms 2008 Also increase your adjusted basis in the property to restore the depletion deduction you previously subtracted. Tax forms 2008   For advanced royalties, include in income the depletion claimed on minerals for which the advanced royalties were paid if the minerals were not produced before the lease ended. Tax forms 2008 Include this amount in income for the year the lease ends. Tax forms 2008 Increase your adjusted basis in the property by the amount you include in income. Tax forms 2008 Delay rentals. Tax forms 2008   These are payments for deferring development of the property. Tax forms 2008 Since delay rentals are ordinary rent, they are ordinary income that is not subject to depletion. Tax forms 2008 These rentals can be avoided by either abandoning the lease, beginning development operations, or obtaining production. Tax forms 2008 Timber You can figure timber depletion only by the cost method. Tax forms 2008 Percentage depletion does not apply to timber. Tax forms 2008 Base your depletion on your cost or other basis in the timber. Tax forms 2008 Your cost does not include the cost of land or any amounts recoverable through depreciation. Tax forms 2008 Depletion takes place when you cut standing timber. Tax forms 2008 You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation. Tax forms 2008 Figuring cost depletion. Tax forms 2008   To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit. Tax forms 2008 Timber units. Tax forms 2008   When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. Tax forms 2008 You measure the timber using board feet, log scale, cords, or other units. Tax forms 2008 If you later determine that you have more or less units of timber, you must adjust the original estimate. Tax forms 2008   The term “timber property” means your economic interest in standing timber in each tract or block representing a separate timber account. Tax forms 2008 Depletion unit. Tax forms 2008   You figure your depletion unit each year by taking the following steps. Tax forms 2008 Determine your cost or adjusted basis of the timber on hand at the beginning of the year. Tax forms 2008 Adjusted basis is defined under Cost Depletion in the discussion on Mineral Property. Tax forms 2008 Add to the amount determined in (1) the cost of any timber units acquired during the year and any additions to capital. Tax forms 2008 Figure the number of timber units to take into account by adding the number of timber units acquired during the year to the number of timber units on hand in the account at the beginning of the year and then adding (or subtracting) any correction to the estimate of the number of timber units remaining in the account. Tax forms 2008 Divide the result of (2) by the result of (3). Tax forms 2008 This is your depletion unit. Tax forms 2008 Example. Tax forms 2008 You bought a timber tract for $160,000 and the land was worth as much as the timber. Tax forms 2008 Your basis for the timber is $80,000. Tax forms 2008 Based on an estimated one million board feet (1,000 MBF) of standing timber, you figure your depletion unit to be $80 per MBF ($80,000 ÷ 1,000). Tax forms 2008 If you cut 500 MBF of timber, your depletion allowance would be $40,000 (500 MBF × $80). Tax forms 2008 When to claim depletion. Tax forms 2008   Claim your depletion allowance as a deduction in the year of sale or other disposition of the products cut from the timber, unless you choose to treat the cutting of timber as a sale or exchange (explained below). Tax forms 2008 Include allowable depletion for timber products not sold during the tax year the timber is cut as a cost item in the closing inventory of timber products for the year. Tax forms 2008 The inventory is your basis for determining gain or loss in the tax year you sell the timber products. Tax forms 2008 Example. Tax forms 2008 The facts are the same as in the previous example except that you sold only half of the timber products in the cutting year. Tax forms 2008 You would deduct $20,000 of the $40,000 depletion that year. Tax forms 2008 You would add the remaining $20,000 depletion to your closing inventory of timber products. Tax forms 2008 Electing to treat the cutting of timber as a sale or exchange. Tax forms 2008   You can elect, under certain circumstances, to treat the cutting of timber held for more than 1 year as a sale or exchange. Tax forms 2008 You must make the election on your income tax return for the tax year to which it applies. Tax forms 2008 If you make this election, subtract the adjusted basis for depletion from the fair market value of the timber on the first day of the tax year in which you cut it to figure the gain or loss on the cutting. Tax forms 2008 You generally report the gain as long-term capital gain. Tax forms 2008 The fair market value then becomes your basis for figuring your ordinary gain or loss on the sale or other disposition of the products cut from the timber. Tax forms 2008 For more information, see Timber in chapter 2 of Publication 544, Sales and Other Dispositions of Assets. Tax forms 2008   You may revoke an election to treat the cutting of timber as a sale or exchange without IRS's consent. Tax forms 2008 The prior election (and revocation) is disregarded for purposes of making a subsequent election. Tax forms 2008 See Form T (Timber), Forest Activities Schedule, for more information. Tax forms 2008 Form T. Tax forms 2008   Complete and attach Form T (Timber) to your income tax return if you claim a deduction for timber depletion, choose to treat the cutting of timber as a sale or exchange, or make an outright sale of timber. Tax forms 2008 Prev  Up  Next   Home   More Online Publications
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Understanding IRS Guidance - A Brief Primer

For anyone not familiar with the inner workings of tax administration, the array of IRS guidance may seem, well, a little puzzling at first glance. To take a little of the mystery away, here's a brief look at seven of the most common forms of guidance.

In its role in administering the tax laws enacted by the Congress, the IRS must take the specifics of these laws and translate them into detailed regulations, rules and procedures. The Office of Chief Counsel fills this crucial role by producing several different kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups.

Regulation

A regulation is issued by the Internal Revenue Service and Treasury Department to provide guidance for new legislation or to address issues that arise with respect to existing Internal Revenue Code sections. Regulations interpret and give directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer's return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer's return, a consideration of a taxpayer's claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.
 

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

Page Last Reviewed or Updated: 12-Feb-2014

The Tax Forms 2008

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