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Where to get 1040ez form Publication 531 - Introductory Material Table of Contents Future Developments What's New Reminder IntroductionOrdering forms and publications. Where to get 1040ez form Tax questions. Where to get 1040ez form Future Developments For the latest information about developments related to Publication 531, such as legislation enacted after this publication was published, go to www. Where to get 1040ez form irs. Where to get 1040ez form gov/pub531. Where to get 1040ez form What's New Additional Medicare Tax. Where to get 1040ez form  Beginning in 2013, a 0. Where to get 1040ez form 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Where to get 1040ez form An employer is required to withhold Additional Medicare Tax on any Medicare wages or RRTA compensation it pays to an employee in excess of $200,000 in a calendar year without regard to the employee's filing status. Where to get 1040ez form An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. Where to get 1040ez form Additional Medicare Tax is only imposed on the employee. Where to get 1040ez form There is no employer share of Additional Medicare Tax. Where to get 1040ez form All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Where to get 1040ez form Tips are subject to Additional Medicare Tax withholding, if, in combination with other wages paid by the employer, they exceed the $200,000 withholding threshold. Where to get 1040ez form Similarly, tips are subject to Additional Medicare Tax withholding, if, in combination with other RRTA compensation paid by the employer, they exceed the $200,000 withholding threshold. Where to get 1040ez form For more information on Additional Medicare Tax, go to www. Where to get 1040ez form irs. Where to get 1040ez form gov and enter “Additional Medicare Tax” in the search box. Where to get 1040ez form Reminder Photographs of missing children. Where to get 1040ez form  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Where to get 1040ez form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Where to get 1040ez form You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Where to get 1040ez form Introduction This publication is for employees who receive tips. Where to get 1040ez form All tips you receive are income and are subject to federal income tax. Where to get 1040ez form You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. Where to get 1040ez form The value of noncash tips, such as tickets, passes, or other items of value, is also income and subject to tax. Where to get 1040ez form Reporting your tip income correctly is not difficult. Where to get 1040ez form You must do three things. Where to get 1040ez form Keep a daily tip record. Where to get 1040ez form Report tips to your employer. Where to get 1040ez form Report all your tips on your income tax return. Where to get 1040ez form  This publication will explain these three things and show you what to do on your tax return if you have not done the first two. Where to get 1040ez form This publication will also show you how to treat allocated tips. Where to get 1040ez form Comments and suggestions. Where to get 1040ez form   We welcome your comments about this publication and your suggestions for future editions. Where to get 1040ez form   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Where to get 1040ez form NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Where to get 1040ez form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Where to get 1040ez form   You can send your comments from www. Where to get 1040ez form irs. Where to get 1040ez form gov/formspubs/. Where to get 1040ez form Click on “More Information” and then on “Comment on Tax Forms and Publications”. Where to get 1040ez form   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Where to get 1040ez form Ordering forms and publications. Where to get 1040ez form   Visit www. Where to get 1040ez form irs. Where to get 1040ez form gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Where to get 1040ez form Internal Revenue Service 1201 N. Where to get 1040ez form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Where to get 1040ez form   If you have a tax question, check the information available on IRS. Where to get 1040ez form gov or call 1-800-829-1040. Where to get 1040ez form We cannot answer tax questions sent to either of the above addresses. Where to get 1040ez form Prev  Up  Next   Home   More Online Publications
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Where to get 1040ez form 23. Where to get 1040ez form   Interest Expense Table of Contents Introduction Useful Items - You may want to see: Home Mortgage InterestAmount Deductible Points Mortgage Insurance Premiums Form 1098, Mortgage Interest Statement Investment InterestInvestment Property Allocation of Interest Expense Limit on Deduction Items You Cannot DeductPersonal Interest Allocation of Interest How To ReportMore than one borrower. Where to get 1040ez form Mortgage proceeds used for business or investment. Where to get 1040ez form Introduction This chapter discusses what interest expenses you can deduct. Where to get 1040ez form Interest is the amount you pay for the use of borrowed money. Where to get 1040ez form The following are types of interest you can deduct as itemized deductions on Schedule A (Form 1040). Where to get 1040ez form Home mortgage interest, including certain points and mortgage insurance premiums. Where to get 1040ez form Investment interest. Where to get 1040ez form This chapter explains these deductions. Where to get 1040ez form It also explains where to deduct other types of interest and lists some types of interest you cannot deduct. Where to get 1040ez form Use Table 23-1 to find out where to get more information on various types of interest, including investment interest. Where to get 1040ez form Useful Items - You may want to see: Publication 936 Home Mortgage Interest Deduction 550 Investment Income and Expenses Home Mortgage Interest Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). Where to get 1040ez form The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan. Where to get 1040ez form You can deduct home mortgage interest if all the following conditions are met. Where to get 1040ez form You file Form 1040 and itemize deductions on Schedule A (Form 1040). Where to get 1040ez form The mortgage is a secured debt on a qualified home in which you have an ownership interest. Where to get 1040ez form (Generally, your mortgage is a secured debt if you put your home up as collateral to protect the interest of the lender. Where to get 1040ez form The term “qualified home” means your main home or second home. Where to get 1040ez form For details, see Publication 936. Where to get 1040ez form )  Both you and the lender must intend that the loan be repaid. Where to get 1040ez form Amount Deductible In most cases, you can deduct all of your home mortgage interest. Where to get 1040ez form How much you can deduct depends on the date of the mortgage, the amount of the mortgage, and how you use the mortgage proceeds. Where to get 1040ez form Fully deductible interest. Where to get 1040ez form   If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. Where to get 1040ez form (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category. Where to get 1040ez form )   The three categories are as follows: Mortgages you took out on or before October 13, 1987 (called grandfathered debt). Where to get 1040ez form Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2013 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately). Where to get 1040ez form Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2013 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2). Where to get 1040ez form The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home. Where to get 1040ez form   See Part II of Publication 936 for more detailed definitions of grandfathered, home acquisition, and home equity debt. Where to get 1040ez form    You can use Figure 23-A to check whether your home mortgage interest is fully deductible. Where to get 1040ez form Figure 23-A. Where to get 1040ez form Is My Home Mortgage Interest Fully Deductible? Please click here for the text description of the image. Where to get 1040ez form Figure 23-A. Where to get 1040ez form Is My Interest Fully Deductible? Limits on deduction. Where to get 1040ez form   You cannot fully deduct interest on a mortgage that does not fit into any of the three categories listed earlier. Where to get 1040ez form If this applies to you, see Part II of Publication 936 to figure the amount of interest you can deduct. Where to get 1040ez form Special Situations This section describes certain items that can be included as home mortgage interest and others that cannot. Where to get 1040ez form It also describes certain special situations that may affect your deduction. Where to get 1040ez form Late payment charge on mortgage payment. Where to get 1040ez form   You can deduct as home mortgage interest a late payment charge if it was not for a specific service performed in connection with your mortgage loan. Where to get 1040ez form Mortgage prepayment penalty. Where to get 1040ez form   If you pay off your home mortgage early, you may have to pay a penalty. Where to get 1040ez form You can deduct that penalty as home mortgage interest provided the penalty is not for a specific service performed or cost incurred in connection with your mortgage loan. Where to get 1040ez form Sale of home. Where to get 1040ez form   If you sell your home, you can deduct your home mortgage interest (subject to any limits that apply) paid up to, but not including, the date of sale. Where to get 1040ez form Example. Where to get 1040ez form John and Peggy Harris sold their home on May 7. Where to get 1040ez form Through April 30, they made home mortgage interest payments of $1,220. Where to get 1040ez form The settlement sheet for the sale of the home showed $50 interest for the 6-day period in May up to, but not including, the date of sale. Where to get 1040ez form Their mortgage interest deduction is $1,270 ($1,220 + $50). Where to get 1040ez form Prepaid interest. Where to get 1040ez form   If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it applies. Where to get 1040ez form You can deduct in each year only the interest that qualifies as home mortgage interest for that year. Where to get 1040ez form However, there is an exception that applies to points, discussed later. Where to get 1040ez form Mortgage interest credit. Where to get 1040ez form   You may be able to claim a mortgage interest credit if you were issued a mortgage credit certificate (MCC) by a state or local government. Where to get 1040ez form Figure the credit on Form 8396, Mortgage Interest Credit. Where to get 1040ez form If you take this credit, you must reduce your mortgage interest deduction by the amount of the credit. Where to get 1040ez form   For more information on the credit, see chapter 37. Where to get 1040ez form Ministers' and military housing allowance. Where to get 1040ez form   If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you can still deduct your home mortgage interest. Where to get 1040ez form Hardest Hit Fund and Emergency Homeowners' Loan Programs. Where to get 1040ez form   You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions. Where to get 1040ez form You received assistance under: A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state. Where to get 1040ez form You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. Where to get 1040ez form If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). Where to get 1040ez form However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home. Where to get 1040ez form Mortgage assistance payments under section 235 of the National Housing Act. Where to get 1040ez form   If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. Where to get 1040ez form You cannot deduct the interest that is paid for you. Where to get 1040ez form No other effect on taxes. Where to get 1040ez form   Do not include these mortgage assistance payments in your income. Where to get 1040ez form Also, do not use these payments to reduce other deductions, such as real estate taxes. Where to get 1040ez form Divorced or separated individuals. Where to get 1040ez form   If a divorce or separation agreement requires you or your spouse or former spouse to pay home mortgage interest on a home owned by both of you, the payment of interest may be alimony. Where to get 1040ez form See the discussion of Payments for jointly-owned home in chapter 18. Where to get 1040ez form Redeemable ground rents. Where to get 1040ez form   If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. Where to get 1040ez form   Payments made to end the lease and to buy the lessor's entire interest in the land are not deductible as mortgage interest. Where to get 1040ez form For more information, see Publication 936. Where to get 1040ez form Nonredeemable ground rents. Where to get 1040ez form   Payments on a nonredeemable ground rent are not mortgage interest. Where to get 1040ez form You can deduct them as rent if they are a business expense or if they are for rental property. Where to get 1040ez form Reverse mortgages. Where to get 1040ez form   A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. Where to get 1040ez form With a reverse mortgage, you retain title to your home. Where to get 1040ez form Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die. Where to get 1040ez form Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Where to get 1040ez form Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until the loan is paid in full. Where to get 1040ez form Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Publication 936. Where to get 1040ez form Rental payments. Where to get 1040ez form   If you live in a house before final settlement on the purchase, any payments you make for that period are rent and not interest. Where to get 1040ez form This is true even if the settlement papers call them interest. Where to get 1040ez form You cannot deduct these payments as home mortgage interest. Where to get 1040ez form Mortgage proceeds invested in tax-exempt securities. Where to get 1040ez form   You cannot deduct the home mortgage interest on grandfathered debt or home equity debt if you used the proceeds of the mortgage to buy securities or certificates that produce tax-free income. Where to get 1040ez form “Grandfathered debt” and “home equity debt” are defined earlier under Amount Deductible. Where to get 1040ez form Refunds of interest. Where to get 1040ez form   If you receive a refund of interest in the same tax year you paid it, you must reduce your interest expense by the amount refunded to you. Where to get 1040ez form If you receive a refund of interest you deducted in an earlier year, you generally must include the refund in income in the year you receive it. Where to get 1040ez form However, you need to include it only up to the amount of the deduction that reduced your tax in the earlier year. Where to get 1040ez form This is true whether the interest overcharge was refunded to you or was used to reduce the outstanding principal on your mortgage. Where to get 1040ez form    If you received a refund of interest you overpaid in an earlier year, you generally will receive a Form 1098, Mortgage Interest Statement, showing the refund in box 3. Where to get 1040ez form For information about Form 1098, see Form 1098, Mortgage Interest Statement , later. Where to get 1040ez form   For more information on how to treat refunds of interest deducted in earlier years, see Recoveries in chapter 12. Where to get 1040ez form Points The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Where to get 1040ez form Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Where to get 1040ez form A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. Where to get 1040ez form See Points paid by the seller , later. Where to get 1040ez form General Rule You generally cannot deduct the full amount of points in the year paid. Where to get 1040ez form Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. Where to get 1040ez form See Deduction Allowed Ratably , next. Where to get 1040ez form For exceptions to the general rule, see Deduction Allowed in Year Paid , later. Where to get 1040ez form Deduction Allowed Ratably If you do not meet the tests listed under Deduction Allowed in Year Paid , later, the loan is not a home improvement loan, or you choose not to deduct your points in full in the year paid, you can deduct the points ratably (equally) over the life of the loan if you meet all the following tests. Where to get 1040ez form You use the cash method of accounting. Where to get 1040ez form This means you report income in the year you receive it and deduct expenses in the year you pay them. Where to get 1040ez form Most individuals use this method. Where to get 1040ez form Your loan is secured by a home. Where to get 1040ez form (The home does not need to be your main home. Where to get 1040ez form ) Your loan period is not more than 30 years. Where to get 1040ez form If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period. Where to get 1040ez form Either your loan amount is $250,000 or less, or the number of points is not more than: 4, if your loan period is 15 years or less, or 6, if your loan period is more than 15 years. Where to get 1040ez form Deduction Allowed in Year Paid You can fully deduct points in the year paid if you meet all the following tests. Where to get 1040ez form (You can use Figure 23-B as a quick guide to see whether your points are fully deductible in the year paid. Where to get 1040ez form ) Your loan is secured by your main home. Where to get 1040ez form (Your main home is the one you ordinarily live in most of the time. Where to get 1040ez form ) Paying points is an established business practice in the area where the loan was made. Where to get 1040ez form The points paid were not more than the points generally charged in that area. Where to get 1040ez form You use the cash method of accounting. Where to get 1040ez form This means you report income in the year you receive it and deduct expenses in the year you pay them. Where to get 1040ez form (If you want more information about this method, see Accounting Methods in chapter 1. Where to get 1040ez form ) The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. Where to get 1040ez form The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. Where to get 1040ez form The funds you provided are not required to have been applied to the points. Where to get 1040ez form They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. Where to get 1040ez form You cannot have borrowed these funds from your lender or mortgage broker. Where to get 1040ez form You use your loan to buy or build your main home. Where to get 1040ez form The points were computed as a percentage of the principal amount of the mortgage. Where to get 1040ez form The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. Where to get 1040ez form The points may be shown as paid from either your funds or the seller's. Where to get 1040ez form Figure 23-B. Where to get 1040ez form Are My Points Fully Deductible This Year? Please click here for the text description of the image. Where to get 1040ez form Figure 23-B. Where to get 1040ez form Are My Points Fully Deductible This Year? Note. Where to get 1040ez form If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan. Where to get 1040ez form Home improvement loan. Where to get 1040ez form   You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met. Where to get 1040ez form Second home. 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Where to get 1040ez form In 2013, Bill refinanced that mortgage with a 15-year $100,000 mortgage loan. Where to get 1040ez form The mortgage is secured by his home. Where to get 1040ez form To get the new loan, he had to pay three points ($3,000). Where to get 1040ez form Two points ($2,000) were for prepaid interest, and one point ($1,000) was charged for services, in place of amounts that ordinarily are stated separately on the settlement statement. Where to get 1040ez form Bill paid the points out of his private funds, rather than out of the proceeds of the new loan. Where to get 1040ez form The payment of points is an established practice in the area, and the points charged are not more than the amount generally charged there. Where to get 1040ez form Bill's first payment on the new loan was due July 1. Where to get 1040ez form He made six payments on the loan in 2013 and is a cash basis taxpayer. Where to get 1040ez form Bill used the funds from the new mortgage to repay his existing mortgage. Where to get 1040ez form Although the new mortgage loan was for Bill's continued ownership of his main home, it was not for the purchase or improvement of that home. Where to get 1040ez form He cannot deduct all of the points in 2013. Where to get 1040ez form He can deduct two points ($2,000) ratably over the life of the loan. Where to get 1040ez form He deducts $67 [($2,000 ÷ 180 months) × 6 payments] of the points in 2013. Where to get 1040ez form The other point ($1,000) was a fee for services and is not deductible. Where to get 1040ez form Example 2. Where to get 1040ez form The facts are the same as in Example 1, except that Bill used $25,000 of the loan proceeds to improve his home and $75,000 to repay his existing mortgage. Where to get 1040ez form Bill deducts 25% ($25,000 ÷ $100,000) of the points ($2,000) in 2013. Where to get 1040ez form His deduction is $500 ($2,000 × 25%). Where to get 1040ez form Bill also deducts the ratable part of the remaining $1,500 ($2,000 − $500) that must be spread over the life of the loan. Where to get 1040ez form This is $50 [($1,500 ÷ 180 months) × 6 payments] in 2013. Where to get 1040ez form The total amount Bill deducts in 2013 is $550 ($500 + $50). Where to get 1040ez form Special Situations This section describes certain special situations that may affect your deduction of points. Where to get 1040ez form Original issue discount. Where to get 1040ez form   If you do not qualify to either deduct the points in the year paid or deduct them ratably over the life of the loan, or if you choose not to use either of these methods, the points reduce the issue price of the loan. Where to get 1040ez form This reduction results in original issue discount, which is discussed in chapter 4 of Publication 535. Where to get 1040ez form Amounts charged for services. Where to get 1040ez form   Amounts charged by the lender for specific services connected to the loan are not interest. Where to get 1040ez form Examples of these charges are: Appraisal fees, Notary fees, and Preparation costs for the mortgage note or deed of trust. Where to get 1040ez form You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. Where to get 1040ez form Points paid by the seller. Where to get 1040ez form   The term “points” includes loan placement fees that the seller pays to the lender to arrange financing for the buyer. Where to get 1040ez form Treatment by seller. Where to get 1040ez form   The seller cannot deduct these fees as interest. Where to get 1040ez form But they are a selling expense that reduces the amount realized by the seller. Where to get 1040ez form See chapter 15 for information on selling your home. Where to get 1040ez form Treatment by buyer. Where to get 1040ez form    The buyer reduces the basis of the home by the amount of the seller-paid points and treats the points as if he or she had paid them. Where to get 1040ez form If all the tests under Deduction Allowed in Year Paid , earlier, are met, the buyer can deduct the points in the year paid. Where to get 1040ez form If any of those tests are not met, the buyer deducts the points over the life of the loan. Where to get 1040ez form   For information about basis, see chapter 13. Where to get 1040ez form Funds provided are less than points. Where to get 1040ez form   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the funds you provided were less than the points charged to you (test (6)), you can deduct the points in the year paid, up to the amount of funds you provided. Where to get 1040ez form In addition, you can deduct any points paid by the seller. Where to get 1040ez form Example 1. Where to get 1040ez form When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). Where to get 1040ez form You meet all the tests for deducting points in the year paid, except the only funds you provided were a $750 down payment. Where to get 1040ez form Of the $1,000 charged for points, you can deduct $750 in the year paid. Where to get 1040ez form You spread the remaining $250 over the life of the mortgage. Where to get 1040ez form Example 2. Where to get 1040ez form The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your mortgage. Where to get 1040ez form In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). Where to get 1040ez form You spread the remaining $250 over the life of the mortgage. Where to get 1040ez form You must reduce the basis of your home by the $1,000 paid by the seller. Where to get 1040ez form Excess points. Where to get 1040ez form   If you meet all the tests in Deduction Allowed in Year Paid , earlier, except that the points paid were more than generally paid in your area (test (3)), you deduct in the year paid only the points that are generally charged. Where to get 1040ez form You must spread any additional points over the life of the mortgage. Where to get 1040ez form Mortgage ending early. Where to get 1040ez form   If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. Where to get 1040ez form However, if you refinance the mortgage with the same lender, you cannot deduct any remaining balance of spread points. Where to get 1040ez form Instead, deduct the remaining balance over the term of the new loan. Where to get 1040ez form    A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event. Where to get 1040ez form Example. Where to get 1040ez form Dan paid $3,000 in points in 2002 that he had to spread out over the 15-year life of the mortgage. Where to get 1040ez form He deducts $200 points per year. Where to get 1040ez form Through 2012, Dan has deducted $2,200 of the points. Where to get 1040ez form Dan prepaid his mortgage in full in 2013. Where to get 1040ez form He can deduct the remaining $800 of points in 2013. Where to get 1040ez form Limits on deduction. Where to get 1040ez form   You cannot fully deduct points paid on a mortgage unless the mortgage fits into one of the categories listed earlier under Fully deductible interest . Where to get 1040ez form See Publication 936 for details. Where to get 1040ez form Mortgage Insurance Premiums You can treat amounts you paid during 2013 for qualified mortgage insurance as home mortgage interest. Where to get 1040ez form The insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006. Where to get 1040ez form Qualified mortgage insurance. Where to get 1040ez form   Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998 as in effect on December 20, 2006). Where to get 1040ez form   Mortgage insurance provided by the Department of Veterans Affairs is commonly known as a funding fee. Where to get 1040ez form If provided by the Rural Housing Service, it is commonly known as a guarantee fee. Where to get 1040ez form These fees can be deducted fully in 2013 if the mortgage insurance contract was issued in 2013. Where to get 1040ez form Contact the mortgage insurance issuer to determine the deductible amount if it is not reported in box 4 of Form 1098. Where to get 1040ez form Special rules for prepaid mortgage insurance. Where to get 1040ez form   Generally, if you paid premiums for qualified mortgage insurance that are allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated. Where to get 1040ez form You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained. Where to get 1040ez form No deduction is allowed for the unamortized balance if the mortgage is satisfied before its term. Where to get 1040ez form This paragraph does not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. Where to get 1040ez form See the Example below. Where to get 1040ez form Example. Where to get 1040ez form Ryan purchased a home in May of 2012 and financed the home with a 15-year mortgage. Where to get 1040ez form Ryan also prepaid all of the $9,240 in private mortgage insurance required at the time of closing in May. Where to get 1040ez form Since the $9,240 in private mortgage insurance is allocable to periods after 2012, Ryan must allocate the $9,240 over the shorter of the life of the mortgage or 84 months. Where to get 1040ez form Ryan's adjusted gross income (AGI) for 2012 is $76,000. Where to get 1040ez form Ryan can deduct $880 ($9,240 ÷ 84 × 8 months) for qualified mortgage insurance premiums in 2012. Where to get 1040ez form For 2013, Ryan can deduct $1,320 ($9,240 ÷ 84 × 12 months) if his AGI is $100,000 or less. Where to get 1040ez form In this example, the mortgage insurance premiums are allocated over 84 months, which is shorter than the life of the mortgage of 15 years (180 months). Where to get 1040ez form Limit on deduction. Where to get 1040ez form   If your adjusted gross income on Form 1040, line 38, is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. Where to get 1040ez form See Line 13 in the instructions for Schedule A (Form 1040) and complete the Mortgage Insurance Premiums Deduction Worksheet to figure the amount you can deduct. Where to get 1040ez form If your adjusted gross income is more than $109,000 ($54,500 if married filing separately), you cannot deduct your mortgage insurance premiums. Where to get 1040ez form Form 1098, Mortgage Interest Statement If you paid $600 or more of mortgage interest (including certain points and mortgage insurance premiums) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement from the mortgage holder. Where to get 1040ez form You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Where to get 1040ez form A governmental unit is a person for purposes of furnishing the statement. Where to get 1040ez form The statement for each year should be sent to you by January 31 of the following year. Where to get 1040ez form A copy of this form will also be sent to the IRS. Where to get 1040ez form The statement will show the total interest you paid during the year, any mortgage insurance premiums you paid, and if you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. Where to get 1040ez form However, it should not show any interest that was paid for you by a government agency. Where to get 1040ez form As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. Where to get 1040ez form However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan. Where to get 1040ez form See Points , earlier, to determine whether you can deduct points not shown on Form 1098. Where to get 1040ez form Prepaid interest on Form 1098. Where to get 1040ez form   If you prepaid interest in 2013 that accrued in full by January 15, 2014, this prepaid interest may be included in box 1 of Form 1098. Where to get 1040ez form However, you cannot deduct the prepaid amount for January 2014 in 2013. Where to get 1040ez form (See Prepaid interest , earlier. Where to get 1040ez form ) You will have to figure the interest that accrued for 2014 and subtract it from the amount in box 1. Where to get 1040ez form You will include the interest for January 2014 with the other interest you pay for 2014. Where to get 1040ez form See How To Report , later. Where to get 1040ez form Refunded interest. Where to get 1040ez form   If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3. Where to get 1040ez form See Refunds of interest , earlier. Where to get 1040ez form Mortgage insurance premiums. Where to get 1040ez form   The amount of mortgage insurance premiums you paid during 2013 may be shown in box 4 of Form 1098. Where to get 1040ez form See Mortgage Insurance Premiums, earlier. Where to get 1040ez form Investment Interest This section discusses interest expenses you may be able to deduct as an investor. Where to get 1040ez form If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Where to get 1040ez form You can deduct investment interest subject to the limit discussed later. Where to get 1040ez form However, you cannot deduct interest you incurred to produce tax-exempt income. Where to get 1040ez form Nor can you deduct interest expenses on straddles. Where to get 1040ez form Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Where to get 1040ez form Investment Property Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Where to get 1040ez form It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Where to get 1040ez form Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Where to get 1040ez form Partners, shareholders, and beneficiaries. Where to get 1040ez form   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Where to get 1040ez form Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Where to get 1040ez form Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Where to get 1040ez form The allocation is not affected by the use of property that secures the debt. Where to get 1040ez form Limit on Deduction Generally, your deduction for investment interest expense is limited to the amount of your net investment income. Where to get 1040ez form You can carry over the amount of investment interest that you could not deduct because of this limit to the next tax year. Where to get 1040ez form The interest carried over is treated as investment interest paid or accrued in that next year. Where to get 1040ez form You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Where to get 1040ez form Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Where to get 1040ez form Investment income. Where to get 1040ez form    This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Where to get 1040ez form Investment income does not include Alaska Permanent Fund dividends. Where to get 1040ez form It also does not include qualified dividends or net capital gain unless you choose to include them. Where to get 1040ez form Choosing to include qualified dividends. Where to get 1040ez form   Investment income generally does not include qualified dividends, discussed in chapter 8. Where to get 1040ez form However, you can choose to include all or part of your qualified dividends in investment income. Where to get 1040ez form   You make this choice by completing Form 4952, line 4g, according to its instructions. Where to get 1040ez form   If you choose to include any amount of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Where to get 1040ez form Choosing to include net capital gain. Where to get 1040ez form   Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Where to get 1040ez form However, you can choose to include all or part of your net capital gain in investment income. Where to get 1040ez form    You make this choice by completing Form 4952, line 4g, according to its instructions. Where to get 1040ez form   If you choose to include any amount of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Where to get 1040ez form    Before making either choice, consider the overall effect on your tax liability. Where to get 1040ez form Compare your tax if you make one or both of these choices with your tax if you do not. Where to get 1040ez form Investment income of child reported on parent's return. Where to get 1040ez form    Investment income includes the part of your child's interest and dividend income that you choose to report on your return. Where to get 1040ez form If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814, Parents' Election To Report Child's Interest and Dividends. Where to get 1040ez form Child's qualified dividends. Where to get 1040ez form   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Where to get 1040ez form However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Where to get 1040ez form   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Where to get 1040ez form Child's Alaska Permanent Fund dividends. Where to get 1040ez form   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Where to get 1040ez form To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Where to get 1040ez form Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Where to get 1040ez form Subtract the result from the amount on Form 8814, line 12. Where to get 1040ez form Child's capital gain distributions. Where to get 1040ez form    If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D, line 13, or Form 1040, line 13) generally does not count as investment income. Where to get 1040ez form However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Where to get 1040ez form   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Where to get 1040ez form Investment expenses. Where to get 1040ez form   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Where to get 1040ez form Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Where to get 1040ez form Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A, line 27. Where to get 1040ez form Losses from passive activities. Where to get 1040ez form   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Where to get 1040ez form See Publication 925, Passive Activity and At-Risk Rules, for information about passive activities. Where to get 1040ez form Form 4952 Use Form 4952, Investment Interest Expense Deduction, to figure your deduction for investment interest. Where to get 1040ez form Exception to use of Form 4952. Where to get 1040ez form   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Where to get 1040ez form Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Where to get 1040ez form You do not have any other deductible investment expenses. Where to get 1040ez form You have no carryover of investment interest expense from 2012. Where to get 1040ez form If you meet all of these tests, you can deduct all of your investment interest. Where to get 1040ez form More Information For more information on investment interest, see Interest Expenses in chapter 3 of Publication 550. Where to get 1040ez form Items You Cannot Deduct Some interest payments are not deductible. Where to get 1040ez form Certain expenses similar to interest also are not deductible. Where to get 1040ez form Nondeductible expenses include the following items. Where to get 1040ez form Personal interest (discussed later). Where to get 1040ez form Service charges (however, see Other Expenses (Line 23) in chapter 28). Where to get 1040ez form Annual fees for credit cards. Where to get 1040ez form Loan fees. Where to get 1040ez form Credit investigation fees. Where to get 1040ez form Interest to purchase or carry tax-exempt securities. Where to get 1040ez form Penalties. Where to get 1040ez form   You cannot deduct fines and penalties paid to a government for violations of law, regardless of their nature. Where to get 1040ez form Personal Interest Personal interest is not deductible. Where to get 1040ez form Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Where to get 1040ez form It includes the following items. Where to get 1040ez form Interest on car loans (unless you use the car for business). Where to get 1040ez form Interest on federal, state, or local income tax. Where to get 1040ez form Finance charges on credit cards, retail installment contracts, and revolving charge accounts incurred for personal expenses. Where to get 1040ez form Late payment charges by a public utility. Where to get 1040ez form You may be able to deduct interest you pay on a qualified student loan. Where to get 1040ez form For details, see Publication 970, Tax Benefits for Education. Where to get 1040ez form Allocation of Interest If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allocate the interest on the loan to each use. Where to get 1040ez form However, you do not have to allocate home mortgage interest if it is fully deductible, regardless of how the funds are used. Where to get 1040ez form You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan itself is allocated. Where to get 1040ez form You do this by tracing disbursements of the debt proceeds to specific uses. Where to get 1040ez form For details on how to do this, see chapter 4 of Publication 535. Where to get 1040ez form How To Report You must file Form 1040 to deduct any home mortgage interest expense on your tax return. Where to get 1040ez form Where you deduct your interest expense generally depends on how you use the loan proceeds. Where to get 1040ez form See Table 23-1 for a summary of where to deduct your interest expense. Where to get 1040ez form Home mortgage interest and points. Where to get 1040ez form   Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. Where to get 1040ez form If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Where to get 1040ez form Attach a statement explaining the difference and print “See attached” next to line 10. Where to get 1040ez form    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. Where to get 1040ez form If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. Where to get 1040ez form The seller must give you this number and you must give the seller your TIN. Where to get 1040ez form A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Where to get 1040ez form Failure to meet any of these requirements may result in a $50 penalty for each failure. Where to get 1040ez form The TIN can be either a social security number, an individual taxpayer identification number (issued by the Internal Revenue Service), or an employer identification number. Where to get 1040ez form See Social Security Number (SSN) in chapter 1 for more information about TINs. Where to get 1040ez form    If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on Schedule A (Form 1040), line 12. Where to get 1040ez form   Deduct mortgage insurance premiums on Schedule A (Form 1040), line 13. Where to get 1040ez form More than one borrower. Where to get 1040ez form   If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Where to get 1040ez form Show how much of the interest each of you paid, and give the name and address of the person who received the form. Where to get 1040ez form Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Where to get 1040ez form Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13. Where to get 1040ez form   Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Where to get 1040ez form You should let each of the other borrowers know what his or her share is. Where to get 1040ez form Mortgage proceeds used for business or investment. Where to get 1040ez form    If your home mortgage interest deduction is limited, but all or part of the mortgage proceeds were used for business, investment, or other deductible activities, see Table 23-1. Where to get 1040ez form It shows where to deduct the part of your excess interest that is for those activities. Where to get 1040ez form Investment interest. Where to get 1040ez form    Deduct investment interest, subject to certain limits discussed in Publication 550, on Schedule A (Form 1040), line 14. Where to get 1040ez form Amortization of bond premium. Where to get 1040ez form   There are various ways to treat the premium you pay to buy taxable bonds. Where to get 1040ez form See Bond Premium Amortization in Publication 550. Where to get 1040ez form Income-producing rental or royalty interest. Where to get 1040ez form   Deduct interest on a loan for income-producing rental or royalty property that is not used in your business in Part I of Schedule E (Form 1040). Where to get 1040ez form Example. Where to get 1040ez form You rent out part of your home and borrow money to make repairs. Where to get 1040ez form You can deduct only the interest payment for the rented part in Part I of Schedule E (Form 1040). Where to get 1040ez form Deduct the rest of the interest payment on Schedule A (Form 1040) if it is deductible home mortgage interest. Where to get 1040ez form Table 23-1. Where to get 1040ez form Where To Deduct Your Interest Expense IF you have . Where to get 1040ez form . Where to get 1040ez form . Where to get 1040ez form THEN deduct it on . Where to get 1040ez form . Where to get 1040ez form . Where to get 1040ez form AND for more information go to . Where to get 1040ez form . Where to get 1040ez form . Where to get 1040ez form deductible student loan interest Form 1040, line 33, or Form 1040A, line 18 Publication 970. Where to get 1040ez form deductible home mortgage interest and points reported on Form 1098 Schedule A (Form 1040), line 10 Publication 936. Where to get 1040ez form deductible home mortgage interest not reported on Form 1098 Schedule A (Form 1040), line 11 Publication 936. Where to get 1040ez form deductible points not reported on Form 1098 Schedule A (Form 1040), line 12 Publication 936. Where to get 1040ez form deductible mortgage insurance premiums Schedule A (Form 1040), line 13 Publication 936. Where to get 1040ez form deductible investment interest (other than incurred to produce rents or royalties) Schedule A (Form 1040), line 14 Publication 550. Where to get 1040ez form deductible business interest (non-farm) Schedule C or C-EZ (Form 1040) Publication 535. Where to get 1040ez form deductible farm business interest Schedule F (Form 1040) Publications 225 and 535. Where to get 1040ez form deductible interest incurred to produce rents or royalties Schedule E (Form 1040) Publications 527 and 535. Where to get 1040ez form personal interest not deductible. Where to get 1040ez form Prev  Up  Next   Home   More Online Publications