For use in preparing Returns
This section summarizes important tax changes that took effect in 2021. Most of these changes are discussed in more detail throughout this publication. Future developments. For the latest information about the tax law topics covered in this publication, such as legislation enacted after it was published, go to IRS.gov/Pub17. Due date of return. File Form 1040 or 1040-SR by April 18, 2022. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia—even if you don’t live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2022. That is because of the Patriots' Day holiday in those states. See chapter 1, later. Who must file. Generally, the amount of income you can receive before you must file a return has been increased. For more information, see chapter 1, later. Tuition and fees deduction not available. The tuition and fees deduction is not available after 2020. Instead, the income limitations for the lifetime learning credit have been increased. See Form 8863 and its instructions. Economic impact payment—EIP 3. Any economic impact payment you received is not taxable for federal income tax purposes, but will reduce your recovery rebate credit. 2021 Recovery Rebate Credit. This credit is figured like last year's economic impact payment, EIP 3, except eligibility and the amount of the credit are based on your tax year 2021 information. See the instructions for Form 1040, line 30, and the Recovery Rebate Credit Worksheet to figure your credit amount. Who must file. Generally, the amount of income you can receive before you must file a return has been increased. For more information, see the Instructions for Form 1040. Standard deduction amount increased. For 2021, the standard deduction amount has been increased for all filers. The amounts are:
See chapter 10, later. .  Virtual currency. If, in 2021, you engaged in a transaction involving virtual currency, you will need to answer “Yes” to the question on page 1 of Form 1040 or 1040-SR. See Virtual Currency in the Instructions for Form 1040 for information on transactions involving virtual currency. Do not leave this field blank. The question must be answered by all taxpayers, not just taxpayers who engaged in a transaction involving virtual currency. Credits for sick and family leave for certain self-employed individuals. The Families First Coronavirus Response Act (FFCRA) helped self-employed individuals affected by coronavirus by providing paid sick leave and paid family leave credits equivalent to those that employers are required to provide their employees for qualified sick leave wages and qualified family leave wages. The COVID-related Tax Relief Act of 2020 extended the period during which individuals can claim these credits. For more information, see the Instructions for Form 7202 and Schedule 3 (Form 1040), line 13b. Extension and expansion of credit for qualified sick and family leave wages. The American Rescue Plan Act of 2021 (the ARP), enacted on March 11, 2021, provides that certain self-employed individuals can claim credits for up to 10 days of “paid sick leave,” and up to 60 days of “paid family leave,” if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021. For more information, see the Instructions for Form 7202 and Schedule 3 (Form 1040), line 13h. Form 9000, Alternative Media Preference. Beginning in 2021, taxpayers with print disabilities can use Form 9000 to elect to receive notices from the IRS in an alternative format including braille, large print, audio, and electronic. You can attach Form 9000 to your Form 1040 or 1040-SR or you can mail it separately. For more information, see Form 9000. All taxpayers now eligible for Identity Protection PIN. Beginning in 2021, the IRS Identity Protection PIN (IP PIN) Opt-In Program has been expanded to all taxpayers who can properly verify their identity. An IP PIN helps prevent your social security number from being used to file a fraudulent federal income tax return. You can use the Get An IP PIN tool on IRS.gov to request an IP PIN, file Form 15227 if your income is $72,000 or less, or make an appointment to visit a Taxpayer Assistance Center. Direct deposit now available for returns filed late. You can now receive a direct deposit of your refund even if you file your 2021 return after November 30, 2022. Expanded dependent care assistance. The ARP expanded the child and dependent care tax credit for 2021 by making it refundable for certain taxpayers and making it larger. For 2021, the dollar limit on qualifying expenses increases to $8,000 for one qualifying person and $16,000 for two or more qualifying persons. The rules for calculating the credit have also changed; the percentage of qualifying expenses eligible for the credit has increased, along with the income limit at which the credit begins phasing out. Additionally, for taxpayers who receive dependent care benefits from their employer, the dollar limit of the exclusion amount increases for 2021. For more information, see the Instructions for Form 2441 and Pub. 503. Child tax credit. Under the ARP, the child tax credit has been enhanced for 2021. The child tax credit has been extended to qualifying children under age 18. Depending on modified adjusted gross income, you may receive an enhanced credit amount of up to $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000 in the case of a joint return or surviving spouse, $112,500 in the case of a head of household, and $75,000 in all other cases.If you (or your spouse if filing jointly) lived in the United States for more than half the year, the child tax credit will be fully refundable even if you don't have earned income. If you don't meet this residency requirement, your child tax credit will be a combination of a nonrefundable child tax credit and a refundable additional child tax credit, as was the case in 2020. The credit for other dependents has not been enhanced and is figured as it was in 2020. . Schedule 8812 (Form 1040). The Schedule 8812 (Form 1040) and its instructions have been revised to be the single source for figuring and reporting the child tax credits and credit for other dependents. The instructions now include all applicable worksheets for figuring these credits. As a result, Pub. 972, Child Tax Credit, won’t be revised. For prior-year versions of Pub. 972, go to IRS.gov/Pub972. Letter 6419. If you received advance child tax credit payments during 2021, you will receive Letter 6419. Keep this notice for your records. You will use the information from this notice to figure the amount of child tax credit to claim on your 2021 tax return or the amount of additional tax you must report on Schedule 2 (Form 1040). Additional tax on excess advance child tax credit payments. If you received advance child tax credit payments during 2021 and the credits you figure using Schedule 8812 (Form 1040) are less than what you received, you may owe an additional tax. Complete Schedule 8812 (Form 1040) to determine if you must report an additional tax on Schedule 2 (Form 1040). Premium tax credit (PTC). The ARP expanded the PTC by eliminating the limitation that a taxpayer's household income may not exceed 400% of the federal poverty line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements. For more information, see Pub. 974 and Form 8962 and its instructions. Changes to the earned income credit (EIC). For 2021, the following changes have been made to the EIC.
File Schedule EIC (Form 1040) if you have a qualifying child. If you have at least one child who meets the conditions to be your qualifying child for purposes of claiming the EIC, complete and attach Schedule EIC to your Form 1040 or 1040-SR even if that child doesn't have a valid SSN. For more information, including how to complete Schedule EIC if your qualifying child doesn't have a valid SSN, see the instructions for Form 1040, line 27a, and Schedule EIC. Forgiveness of Paycheck Protection Program (PPP) loans. The forgiveness of a PPP loan creates tax-exempt income, so you don't need to report the income on Form 1040 or 1040-SR, but you do need to report certain information related to your PPP loan. To find out how to report information related to your PPP loan, see Forgiveness of Paycheck Protection Program (PPP) Loans under Income in the Instructions for Form 1040. Identity verification. The IRS launched an improved identity verification and sign-in process that enables more people to securely access and use IRS online tools and applications. To provide verification services, the IRS is using ID.me, a trusted technology provider. The new process is one more step the IRS is taking to ensure that taxpayer information is provided only to the person who legally has a right to the data. Taxpayers using the new mobile-friendly verification procedure can gain entry to existing IRS online services such as the Child Tax Credit Update Portal, On-line Account, Get Transcript Online, Get an Identity Protection PIN (IP PIN), and Online Payment Agreement. Additional IRS applications will transition to the new method over the next year. Each online service will also provide information that will instruct taxpayers on the steps they need to follow for access to the service. You can also see IR-2021-228 for more information. Personal protective equipment (PPE). Amounts paid for PPE, such as masks, hand sanitizer, and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus, are qualified medical expenses. If the amounts were paid or reimbursed under a health flexible spending account, Archer medical savings account, health reimbursement arrangement, or any other health plan, the amounts are not deductible on Schedule A (Form 1040). Standard mileage rates. The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons decreased to 16 cents a mile. The 2021 rate for use of your vehicle to do volunteer work for certain charitable organizations remains at 14 cents a mile and the rate for business use of a vehicle is 56 cents a mile. Modified AGI limit for traditional IRA contributions. For 2021, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work but you aren’t, your deduction is phased out if your modified AGI is more than $198,000 but less than $208,000. If your modified AGI is $206,000 or more, you can’t take a deduction for contributions to a traditional IRA. See How Much Can You Deduct in chapter 9, later. Modified AGI limit for Roth IRA contributions. For 2021, your Roth IRA contribution limit is reduced (phased out) in the following situations.
2022 modified AGI limits. You can find information about the 2022 contribution and AGI limits in Pub. 590-A. Form 1040-X continuous-use form and instructions. Form 1040-X, Amended U.S. Individual Income Tax Return, and its instructions have been converted from an annual revision to continuous use beginning in tax year 2021. Both the form and instructions will be updated as required. For the most recent version, go to IRS.gov/Form1040X. Section discussions and charts that were updated annually have been removed, or replaced with references to relevant forms, schedules, instructions, and publications. See the forms, schedules, instructions, and publications for the year of the tax return you are amending for guidance on specific topics. Business meals. Section 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for the temporary allowance of a 100% business meal deduction for food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023. Tax law changes for 2022. When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2022. For more information, see Pub. 505, Tax Withholding and Estimated Tax. Form 8915-F replaces Form 8915-E. Form 8915-F replaces Form 8915-E for reporting qualified 2020 disaster distributions and repayments of those distributions made in 2021 and 2022, as applicable, unlike in previous disaster years where distributions and repayments would be reported on the applicable Form 8915 for that year's disasters. For example, Form 8915-D, Qualified 2019 Disaster Retirement Plan Distributions and Repayments, would be used to report qualified 2019 disaster distributions and repayments. For more information, see the Instructions for Form 8915-F. Qualified business income deduction. The simplified worksheet for figuring your qualified business income deduction is now Form 8995, Qualified Business Income Deduction Simplified Computation. If you don't meet the requirements to file Form 8995, use Form 8995-A, Qualified Business Income Deduction. For more information, see each form's instructions. Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $73,600 ($114,600 if married filing jointly or qualifying widow(er); $57,300 if married filing separately). The income levels at which the AMT exemption begins to phase out have increased to $523,600 ($1,047,200 if married filing jointly or qualifying widow(er)). Adoption credit. The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $14,440 per eligible child in 2020. The amount begins to phase out if you have modified AGI in excess of $216,660 and is completely phased out if your modified AGI is $256,660 or more.
Listed below are important reminders and other items that may help you file your 2021 tax return. Many of these items are explained in more detail later in this publication. Publication 17 changes. We removed the following 2019 chapters from this publication: 6, 8, 9, 10, 13, 14, 15, 16, 18, 19, 20, 22, 24, 25, 26, 29, 30, 31, 33, 34, 35, and 36. You can find most of the information previously found in those chapters in the primary publication. Please see Publication 17 changes, later. Special rules for eligible gains invested in Qualified Opportunity Funds. If you have an eligible gain, you can invest that gain into a Qualified Opportunity Fund (QOF) and elect to defer part or all of the gain that is otherwise includible in income. The gain is deferred until the date you sell or exchange the investment or December 31, 2026, whichever is earlier. You may also be able to permanently exclude gain from the sale or exchange of an investment in a QOF if the investment is held for at least 10 years. For information about what types of gains entitle you to elect these special rules, see the Instructions for Schedule D (Form 1040). For information on how to elect to use these special rules, see the Instructions for Form 8949. Secure your tax records from identity theft. Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. For more information about identity theft and how to reduce your risk from it, see chapter 1, later. Taxpayer identification numbers. You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. This applies even if the person was born in 2021. Generally, this number is the person's SSN. See chapter 1, later. Foreign-source income. If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by law or a tax treaty. This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents, and royalties). If you live outside the United States, you may be able to exclude part or all of your foreign earned income. For details, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. Foreign financial assets. If you had foreign financial assets in 2021, you may have to file Form 8938 with your return. See Form 8938 and its instructions or visit IRS.gov/Form8938 for details. Automatic 6-month extension to file tax return. You can get an automatic 6-month extension of time to file your tax return. See chapter 1, later. Payment of taxes. You can pay your taxes by making electronic payments online; from a mobile device using the IRS2Go app; or in cash, or by check or money order. Paying electronically is quick, easy, and faster than mailing in a check or money order. See chapter 1, later. Faster ways to file your return. The IRS offers fast, accurate ways to file your tax return information without filing a paper tax return. You can use IRS e-file (electronic filing). See chapter 1, later. Free electronic filing. You may be able to file your 2021 taxes online for free. See chapter 1, later. Change of address. If you change your address, notify the IRS. See chapter 1, later. Refund on a late-filed return. If you were due a refund but you did not file a return, you must generally file your return within 3 years from the date the return was due (including extensions) to get that refund. See chapter 1, later. Frivolous tax returns. The IRS has published a list of positions that are identified as frivolous. The penalty for filing a frivolous tax return is $5,000. See chapter 1, later. Filing erroneous claim for refund or credit. You may have to pay a penalty if you file an erroneous claim for refund or credit. See chapter 1, later. Access your online account. You must authenticate your identity. To securely log into your federal tax account, go to IRS.gov/Account. View the amount you owe, review 24 months of payment history, access online payment options, and create or modify an online payment agreement. You can also access your tax records online. Health care coverage. If you need health care coverage, go to HealthCare.gov to learn about health insurance options for you and your family, how to buy health insurance, and how you might qualify to get financial assistance to buy health insurance. Disclosure, Privacy Act, and paperwork reduction information. The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduction Act of 1980 require that when we ask you for information, we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. A complete statement on this subject can be found in your tax form instructions. Preparer e-file mandate. Most paid preparers must e-file returns they prepare and file. Your preparer may make you aware of this requirement and the options available to you. Treasury Inspector General for Tax Administration. If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 800-366-4484 (call 800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). You can remain anonymous. Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (800-843-5678) if you recognize a child.
The four chapters in this part provide basic information on the tax system. They take you through the first steps of filling out a tax return. They also provide information about dependents, and discuss recordkeeping requirements, IRS e-file (electronic filing), certain penalties, and the two methods used to pay tax during the year: withholding and estimated tax. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:
Due date of return. File Form 1040 or 1040-SR by April 18, 2022. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia—even if you don't live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2022. That is because of the Patriots' Day holiday in those states. Who must file. Generally, the amount of income you can receive before you must file a return has been increased. See Table 1-1, Table 1-2, and Table 1-3 for the specific amounts.
File online. Rather than filing a return on paper, you may be able to file electronically using IRS e-file. For more information, see Why Should I File Electronically, later. Access your online account (individual taxpayers only). Go to IRS.gov/Account to securely access information about your federal tax account.
Change of address. If you change your address, you should notify the IRS. You can use Form 8822 to notify the IRS of the change. See Change of Address, later, under What Happens After I File. Enter your social security number. You must enter your social security number (SSN) in the spaces provided on your tax return. If you file a joint return, enter the SSNs in the same order as the names. Direct deposit of refund. Instead of getting a paper check, you may be able to have your refund deposited directly into your account at a bank or other financial institution. See Direct Deposit under Refunds, later. If you choose direct deposit of your refund, you may be able to split the refund among two or three accounts. Pay online or by phone. If you owe additional tax, you may be able to pay online or by phone. See How To Pay, later. Installment agreement. If you can’t pay the full amount due with your return, you may ask to make monthly installment payments. See Installment Agreement, later, under Amount You Owe. You may be able to apply online for a payment agreement if you owe federal tax, interest, and penalties. Automatic 6-month extension. You can get an automatic 6-month extension to file your tax return if, no later than the date your return is due, you file Form 4868. See Automatic Extension, later. Service in combat zone. You are allowed extra time to take care of your tax matters if you are a member of the Armed Forces who served in a combat zone, or if you served in a combat zone in support of the Armed Forces. See Individuals Serving in Combat Zone, later, under When Do I Have To File. Adoption taxpayer identification number. If a child has been placed in your home for purposes of legal adoption and you won't be able to get a social security number for the child in time to file your return, you may be able to get an adoption taxpayer identification number (ATIN). For more information, see Social Security Number (SSN), later. Taxpayer identification number for aliens. If you or your dependent is a nonresident or resident alien who doesn't have and isn't eligible to get a social security number, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. For more information, see Social Security Number (SSN), later. Individual taxpayer identification number (ITIN) renewal. Some ITINs must be renewed. If you haven't used your ITIN on a U.S. tax return at least once for tax years 2018, 2019, or 2020, it expired at the end of 2021 and must be renewed if you need to file a U.S. federal tax return in 2022. You don't need to renew your ITIN if you don't need to file a federal tax return. You can find more information at IRS.gov/ITIN. . Frivolous tax submissions. The IRS has published a list of positions that are identified as frivolous. The penalty for filing a frivolous tax return is $5,000. Also, the $5,000 penalty will apply to other specified frivolous submissions. For more information, see Civil Penalties, later.
This chapter discusses the following topics.
You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements for any of the following categories that apply to you.
The filing requirements apply even if you don't owe tax. . .
If you are a U.S. citizen or resident, whether you must file a return depends on three factors.
To find out whether you must file, see Table 1-1, Table 1-2, and Table 1-3. Even if no table shows that you must file, you may need to file to get money back. See Who Should File, later.
You must file a final return for a decedent (a person who died) if both of the following are true.
For more information on rules for filing a decedent's final return, see Pub. 559.
To determine whether you must file a return, include in your gross income any income you received abroad, including any income you can exclude under the foreign earned income exclusion. For information on special tax rules that may apply to you, see Pub. 54. It is available online and at most U.S. embassies and consulates. See How To Get Tax Help in the back of this publication.
If you are a U.S. citizen and also a bona fide resident of Puerto Rico, you must generally file a U.S. income tax return for any year in which you meet the income requirements. This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico. If you are a bona fide resident of Puerto Rico for the entire year, your U.S. gross income doesn't include income from sources within
If you had income from Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U.S. Virgin Islands, special rules may apply when determining whether you must file a U.S. federal income tax return. In addition, you may have to file a return with the individual island government. See Pub. 570 for more information.
If you are a dependent (one who meets the dependency tests in chapter 3), see Table 1-2 to find out whether you must file a return. You must also file if your situation is described in Table 1-3.
If a child's only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was under age 19 at the end of 2021 or was a full-time student under age 24 at the end of 2021, and certain other conditions are met, a parent can elect to include the child's income on the parent's return. If this election is made, the child doesn't have to file a return. See Parent's Election To Report Child's Interest and Dividends in Pub. 929, Tax Rules for Children and Dependents.
You are self-employed if you:
Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 or 1040-SR and Schedule SE (Form 1040), Self-Employment Tax, if:
Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business.
Your status as an alien (resident, nonresident, or dual-status) determines whether and how you must file an income tax return. The rules used to determine your alien status are discussed in Pub. 519, U.S. Tax Guide for Aliens.
Even if you don't have to file, you should file a federal income tax return to get money back if any of the following conditions apply.
Use Form 1040 or 1040-SR to file your return. (But also see Why Should I File Electronically, later.) You can use Form 1040 or 1040-SR to report all types of income, deductions, and credits.
If your adjusted gross income (AGI) is less than a certain amount, you are eligible for Free File, a free tax software service offered by IRS partners, to prepare and e-file your return for free. If your income is over the amount, you are still eligible for Free File Fillable Forms, an electronic version of IRS paper forms. Table 1-4 lists the free ways to electronically file your return. . If your return is filed with IRS e-file, you will receive an acknowledgment that your return was received and accepted. If you owe tax, you can e-file and pay electronically. The IRS has processed more than one billion e-filed returns safely and securely. Using e-file doesn't affect your chances of an IRS examination of your return.
Self-Select PIN. The Self-Select PIN method allows you to create your own PIN. If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. A PIN is any combination of five digits you choose except five zeros. If you use a PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. Your electronic return is considered a valid signed return only when it includes your PIN; last name; date of birth; IP PIN, if applicable; and AGI from your originally filed 2020 federal income tax return, if applicable. If you're filing jointly, your electronic return must also include your spouse's PIN; last name; date of birth; IP PIN, if applicable; and AGI, if applicable, in order to be considered validly signed. Don't use AGI from an amended return (Form 1040-X) or a math error correction made by the IRS. AGI is the amount shown on your 2020 Form 1040 or Form 1040-SR, line 11. If you don't have your 2020 income tax return, you can request a transcript by using our automated self-service tool. Go to IRS.gov/Transcript. (If you filed electronically last year, you, and your spouse if filing jointly, may use your prior year PIN to verify your identity instead of your prior year AGI. The prior year PIN is the five-digit PIN you used to electronically sign your 2020 return.) You will also be prompted to enter your date of birth.
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Refunds. You can have a refund check mailed to you, or you can have your refund deposited directly to your checking or savings account or split among two or three accounts. With e-file, your refund will be issued faster than if you filed on paper. As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain other federal nontax debts, such as student loans. See Offset against debts under Refunds, later.
. IRS-approved tax preparation software is available for online use on the Internet, for download from the Internet, and in retail stores. For information, visit IRS.gov/efile.
Some businesses offer free e-file to their employees, members, or customers. Others offer it for a fee. Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit.
The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $58,000 or less, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. You can go to IRS.gov to see your options for preparing and filing your return, which include the following.
Many tax professionals electronically file tax returns for their clients. You may personally enter your PIN or complete Form 8879, IRS e-file Signature Authorization, to authorize the tax professional to enter your PIN on your return.
Tax professionals may charge a fee for IRS e-file. Fees can vary depending on the professional and the specific services rendered.
April 18, 2022, is the due date for filing your 2021 income tax return if you use the calendar year. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia—even if you don't live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2022. That is because of the Patriots' Day holiday in those states. For a quick view of due dates for filing a return with or without an extension of time to file (discussed later), see Table 1-5.
If you use a fiscal year (a year ending on the last day of any month except December, or a 52-53-week year), your income tax return is due by the 15th day of the 4th month after the close of your fiscal year. When the due date for doing any act for tax purposes—filing a return, paying taxes, etc.—falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.
You may be able to get an extension of time to file your return. There are three types of situations where you may qualify for an extension.
You are allowed an automatic 2-month extension, without filing Form 4868 (until June 15, 2022, if you use the calendar year), to file your 2021 return and pay any federal income tax due if:
However, if you pay the tax due after the regular due date (April 15 for most taxpayers), interest will be charged from that date until the date the tax is paid. If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. See Individuals Serving in Combat Zone, later, for special rules that apply to you.
The deadline for filing your tax return, paying any tax you may owe, and filing a claim for refund is automatically extended if you serve in a combat zone. This applies to members of the Armed Forces, as well as merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces in support of the Armed Forces.
Extension period. The deadline for filing your return, paying any tax due, filing a claim for refund, and taking other actions with the IRS is extended in two steps. First, your deadline is extended for 180 days after the later of:
Second, in addition to the 180 days, your deadline is also extended by the number of days you had left to take action with the IRS when you entered the combat zone. For example, you have 3½ months (January 1–April 15) to file your tax return. Any days left in this period when you entered the combat zone (or the entire 3½ months if you entered it before the beginning of the year) are added to the 180 days. See Extension of Deadlines in Pub. 3 for more information. The rules on the extension for filing your return also apply when you are deployed outside the United States (away from your permanent duty station) while participating in a designated contingency operation.
This section explains how to get ready to fill in your tax return and when to report your income and expenses. It also explains how to complete certain sections of the form. You may find Table 1-6 helpful when you prepare your paper return.
You must figure your taxable income on the basis of a tax year. A “tax year” is an annual accounting period used for keeping records and reporting income and expenses. You must account for your income and expenses in a way that clearly shows your taxable income. The way you do this is called an accounting method. This section explains which accounting periods and methods you can use.
Most individual tax returns cover a calendar year—the 12 months from January 1 through December 31. If you don't use a calendar year, your accounting period is a fiscal year. A regular fiscal year is a 12-month period that ends on the last day of any month except December. A 52-53-week fiscal year varies from 52 to 53 weeks and always ends on the same day of the week. You choose your accounting period (tax year) when you file your first income tax return. It can’t be longer than 12 months.
You must enter your SSN on your return. If you are married, enter the SSNs for both you and your spouse, whether you file jointly or separately. If you are filing a joint return, include the SSNs in the same order as the names. Use this same order in submitting other forms and documents to the IRS. . Once you are issued an SSN, use it to file your tax return. Use your SSN to file your tax return even if your SSN does not authorize employment or if you have been issued an SSN that authorizes employment and you lose your employment authorization. An ITIN will not be issued to you once you have been issued an SSN. If you received your SSN after previously using an ITIN, stop using your ITIN. Use your SSN instead. Check that both the name and SSN on your Form 1040 or 1040-SR, W-2, and 1099 agree with your social security card. If they don't, certain deductions and credits on your Form 1040 or 1040-SR may be reduced or disallowed and you may not receive credit for your social security earnings. If your Form W-2 shows an incorrect SSN or name, notify your employer or the form-issuing agent as soon as possible to make sure your earnings are credited to your social security record. If the name or SSN on your social security card is incorrect, call the Social Security Administration (SSA) at 800-772-1213. .
This fund helps pay for Presidential election campaigns. The fund also helps pay for pediatric medical research. If you want $3 to go to this fund, check the box. If you are filing a joint return, your spouse can also have $3 go to the fund. If you check the box, your tax or refund won't change.
The following information may be useful in making the return easier to complete.
Depending on the form you file and the items reported on your return, you may have to complete additional schedules and forms and attach them to your paper return. .
If you want to allow your preparer, a friend, a family member, or any other person you choose to discuss your 2021 tax return with the IRS, check the “Yes” box in the “Third Party Designee” area of your return. Also, enter the designee's name, phone number, and any five digits the designee chooses as his or her personal identification number (PIN). If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any questions that arise during the processing of your return. You are also authorizing the designee to:
You aren't authorizing the designee to receive any refund check, bind you to anything (including any additional tax liability), or otherwise represent you before the IRS. If you want to expand the designee's authorization, see Pub. 947. The authorization will automatically end no later than the due date (without any extensions) for filing your 2022 tax return. This is April 18, 2023, for most people. See your form instructions for more information.
You must sign and date your return. If you file a joint return, both you and your spouse must sign the return, even if only one of you had income. . Your return isn't considered a valid return unless you sign it in accordance with the requirements in the instructions for your return. You must handwrite your signature on your return if you file it on paper. Digital, electronic, or typed-font signatures are not valid signatures for Forms 1040 or 1040-SR filed on paper. If you electronically file your return, you can use an electronic signature to sign your return in accordance with the requirements contained in the instructions for your return. Failure to sign your return in accordance with these requirements may prevent you from obtaining a refund. Enter your occupation. If you file a joint return, enter both your occupation and your spouse's occupation.
Generally, anyone you pay to prepare, assist in preparing, or review your tax return must sign it and fill in the other blanks, including their Preparer Tax Identification Number (PTIN), in the paid preparer's area of your return. Many preparers are required to e-file the tax returns they prepare. They sign these e-filed returns using their tax preparation software. However, you can choose to have your return completed on paper if you prefer. In that case, the paid preparer can sign the paper return manually or use a rubber stamp or mechanical device. The preparer is personally responsible for affixing his or her signature to the return. If the preparer is self-employed (that is, not employed by any person or business to prepare the return), he or she should check the self-employed box in the “Paid Preparer Use Only” space on the return. The preparer must give you a copy of your return in addition to the copy filed with the IRS. If you prepare your own return, leave this area blank. If another person prepares your return and doesn't charge you, that person shouldn't sign your return. If you have questions about whether a preparer must sign your return, contact any IRS office.
When you complete your return, you will determine if you paid more income tax than you owed. If so, you can get a refund of the amount you overpaid or you can choose to apply all or part of the overpayment to your next year's (2022) estimated tax. . Follow the Instructions for Form 1040 to complete the entries to claim your refund and/or to apply your overpayment to your 2022 estimated tax. . . Don't request a deposit of any part of your refund to an account that isn't in your name. Don't allow your tax preparer to deposit any part of your refund into his or her account. The number of direct deposits to a single account or prepaid debit card is limited to three refunds a year. After this limit is exceeded, paper checks will be sent instead. Learn more at IRS.gov/Individuals/Direct-Deposit-Limits.
Refund more or less than expected. If you receive a check for a refund you aren’t entitled to, or for an overpayment that should have been credited to estimated tax, don't cash the check. Call the IRS. If you receive a check for more than the refund you claimed, don't cash the check until you receive a notice explaining the difference. If your refund check is for less than you claimed, it should be accompanied by a notice explaining the difference. Cashing the check doesn't stop you from claiming an additional amount of refund. If you didn't receive a notice and you have any questions about the amount of your refund, you should wait 2 weeks. If you still haven’t received a notice, call the IRS.
Joint return and injured spouse. When a joint return is filed and only one spouse owes a past-due amount, the other spouse can be considered an injured spouse. An injured spouse should file Form 8379, Injured Spouse Allocation, if both of the following apply and the spouse wants a refund of his or her share of the overpayment shown on the joint return.
If the injured spouse's residence was in a community property state at any time during the tax year, special rules may apply. See the Instructions for Form 8379. If you haven’t filed your joint return and you know that your joint refund will be offset, file Form 8379 with your return. 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. If you filed your joint return and your joint refund was offset, file Form 8379 by itself. When filed after offset, it can take up to 8 weeks to receive your refund. Don't attach the previously filed tax return, but do include copies of all Forms W-2 and W-2G for both spouses and any Forms 1099 that show income tax withheld. The processing of Form 8379 may be delayed if these forms aren’t attached, or if the form is incomplete when filed. A separate Form 8379 must be filed for each tax year to be considered. .
When you complete your return, you will determine if you have paid the full amount of tax that you owe. If you owe additional tax, you should pay it with your return. . If the IRS figures your tax for you, you will receive a bill for any tax that is due. You should pay this bill within 30 days (or by the due date of your return, if later). See Tax Figured by IRS in chapter 13. . .
You can pay online, by phone, by mobile device, in cash, or by check or money order. Don't include any estimated tax payment for 2022 in this payment. Instead, make the estimated tax payment separately.
Pay by phone. Paying by phone is another safe and secure method of paying online. Use one of the following methods.
To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 800-555-4477 (English) or 800-244-4829 (Español). People who are deaf, hard of hearing, or have a speech disability and have access to TTY/TDD equipment can call 800-733-4829. For more information about EFTPS, go to IRS.gov/Payments or EFTPS.gov. To pay using a debit or credit card, you can call one of the following service providers. There is a convenience fee charged by these providers that varies by provider, card type, and payment amount. ACI Payments, Inc.888-UPAY-TAXTM (888-872-9829) fed.acipayonline.com Link2Gov Corporation 888-PAY-1040TM (888-729-1040) www.PAY1040.com WorldPay US, Inc. 844-PAY-TAX-8TM (844-729-8298) www.payUSAtax.com For the latest details on how to pay by phone, go to IRS.gov/Payments.
Interest is charged on tax you don't pay by the due date of your return. Interest is charged even if you get an extension of time for filing. . Interest and certain penalties may also be suspended for a limited period if you filed your return by the due date (including extensions) and the IRS doesn't provide you with a notice specifically stating your liability and the basis for it before the close of the 36-month period beginning on the later of:
If you can’t pay the full amount due with your return, you can ask to make monthly installment payments for the full or a partial amount. However, you will be charged interest and may be charged a late payment penalty on the tax not paid by the date your return is due, even if your request to pay in installments is granted. If your request is granted, you must also pay a fee. To limit the interest and penalty charges, pay as much of the tax as possible with your return. But before requesting an installment agreement, you should consider other less costly alternatives, such as a bank loan or credit card payment. To apply for an installment agreement online, go to IRS.gov/OPA. You can also use Form 9465. In addition to paying by check or money order, you can use a credit or debit card or direct payment from your bank account to make installment agreement payments. See How To Pay, earlier.
. Send your check to: Bureau of the Fiscal Service ATTN: Department G P.O. Box 2188Parkersburg, WV 26106-2188 Or enclose your separate check in the envelope with your income tax return. Don't add this gift to any tax you owe.For information on making this type of gift online, go to TreasuryDirect.gov and see the information under “How do you make a contribution to reduce the debt?” You may be able to deduct this gift as a charitable contribution on next year's tax return if you itemize your deductions on Schedule A (Form 1040).
After you complete your return, you must send it to the IRS. You can mail it or you may be able to file it electronically. See Why Should I File Electronically, earlier.
After you send your return to the IRS, you may have some questions. This section discusses concerns you may have about recordkeeping, your refund, and what to do if you move.
This part discusses why you should keep records, what kinds of records you should keep, and how long you should keep them. . If you file a claim for refund, you must be able to prove by your records that you have overpaid your tax. This part doesn't discuss the records you should keep when operating a business. For information on business records, see Pub. 583, Starting a Business and Keeping Records.
Good records help you:
The IRS doesn't require you to keep your records in a particular way. Keep them in a manner that allows you and the IRS to determine your correct tax. You can use your checkbook to keep a record of your income and expenses. You also need to keep documents, such as receipts and sales slips, that can help prove a deduction. In this section, you will find guidance about basic records that everyone should keep. The section also provides guidance about specific records you should keep for certain items.
Basic records are documents that everybody should keep. These are the records that prove your income and expenses. If you own a home or investments, your basic records should contain documents related to those items.
If you receive a Form W-2, keep Copy C until you begin receiving social security benefits. This will help protect your benefits in case there is a question about your work record or earnings in a particular year.
Home. Your basic records should enable you to determine the basis or adjusted basis of your home. You need this information to determine if you have a gain or loss when you sell your home or to figure depreciation if you use part of your home for business purposes or for rent. Your records should show the purchase price, settlement or closing costs, and the cost of any improvements. They may also show any casualty losses deducted and insurance reimbursements for casualty losses. For detailed information on basis, including which settlement or closing costs are included in the basis of your home, see Pub. 551, Basis of Assets. When you sell your home, your records should show the sales price and any selling expenses, such as commissions. For information on selling your home, see Pub. 523, Selling Your Home.
Investments. Your basic records should enable you to determine your basis in an investment and whether you have a gain or loss when you sell it. Investments include stocks, bonds, and mutual funds. Your records should show the purchase price, sales price, and commissions. They may also show any reinvested dividends, stock splits and dividends, load charges, and original issue discount (OID). For information on stocks, bonds, and mutual funds, see Pub. 550, Investment Income and Expenses, and Pub. 551.
One of your basic records is proof of payment. You should keep these records to support certain amounts shown on your tax return. Proof of payment alone isn't proof that the item claimed on your return is allowable. You should also keep other documents that will help prove that the item is allowable. Generally, you prove payment with a cash receipt, financial account statement, credit card statement, canceled check, or substitute check. If you make payments in cash, you should get a dated and signed receipt showing the amount and the reason for the payment. If you make payments using your bank account, you may be able to prove payment with an account statement.
You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out. The period of limitations is the period of time in which you can amend your return to claim a credit or refund or the IRS can assess additional tax. Table 1-7 contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period beginning after the return was filed. Returns filed before the due date are treated as being filed on the due date.
Table 1-7. Period of Limitations
You can go online to check the status of your 2021 refund 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail a paper return. If you filed Form 8379 with your return, allow 14 weeks (11 weeks if you filed electronically) before checking your refund status. Be sure to have a copy of your 2021 tax return handy because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. To check on your refund, do one of the following.
If you are due a refund, you may get interest on it. The interest rates are adjusted quarterly. If the refund is made within 45 days after the due date of your return, no interest will be paid. If you file your return after the due date (including extensions), no interest will be paid if the refund is made within 45 days after the date you filed. If the refund isn't made within this 45-day period, interest will be paid from the due date of the return or from the date you filed, whichever is later. Accepting a refund check doesn't change your right to claim an additional refund and interest. File your claim within the period of time that applies. See Amended Returns and Claims for Refund, later. If you don't accept a refund check, no more interest will be paid on the overpayment included in the check.
If you have moved, file your return using your new address. If you move after you filed your return, you should give the IRS clear and concise notification of your change of address. The notification may be written, electronic, or oral. Send written notification to the Internal Revenue Service Center serving your old address. You can use Form 8822, Change of Address. If you are expecting a refund, also notify the post office serving your old address. This will help in forwarding your check to your new address (unless you chose direct deposit of your refund). For more information, see Revenue Procedure 2010-16, 2010-19 I.R.B. 664, available at IRS.gov/irb/2010-19_IRB/ar07.html. Be sure to include your SSN (and the name and SSN of your spouse if you filed a joint return) in any correspondence with the IRS.
Errors may delay your refund or result in notices being sent to you. If you discover an error, you can file an amended return or claim for refund.
You should correct your return if, after you have filed it, you find that:
Completing Form 1040-X. On Form 1040-X, enter your income, deductions, and credits as you originally reported them on your return; the changes you are making; and the corrected amounts. Then, figure the tax on the corrected amount of taxable income and the amount you owe or your refund. If you owe tax, the IRS offers several payment options. See How To Pay, earlier. The tax owed won't be subtracted from any amount you had credited to your estimated tax. If you can’t pay the full amount due with your return, you can ask to make monthly installment payments. See Installment Agreement, earlier. If you overpaid tax, you can have all or part of the overpayment refunded to you, or you can apply all or part of it to your estimated tax. If you choose to get a refund, it will be sent separately from any refund shown on your original return.
Time for filing a claim for refund. Generally, you must file your claim for a credit or refund within 3 years after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date (even if the due date was a Saturday, Sunday, or legal holiday). These time periods are suspended while you are financially disabled, discussed later. If the last day for claiming a credit or refund is a Saturday, Sunday, or legal holiday, you can file the claim on the next business day. If you don't file a claim within this period, you may not be entitled to a credit or a refund.
Tax paid. Payments, including estimated tax payments, made before the due date (without regard to extensions) of the original return are considered paid on the due date. For example, income tax withheld during the year is considered paid on the due date of the return, which is April 15 for most taxpayers.
Example 1. You made estimated tax payments of $500 and got an automatic extension of time to October 15, 2018, to file your 2017 income tax return. When you filed your return on that date, you paid an additional $200 tax. On October 15, 2021, you filed an amended return and claimed a refund of $700. Because you filed your claim within 3 years after you filed your original return, you can get a refund of up to $700, the tax paid within the 3 years plus the 6-month extension period immediately before you filed the claim.
Example 2. The situation is the same as in Example 1, except you filed your return on October 30, 2018, 2 weeks after the extension period ended. You paid an additional $200 on that date. On October 31, 2021, you filed an amended return and claimed a refund of $700. Although you filed your claim within 3 years from the date you filed your original return, the refund was limited to $200, the tax paid within the 3 years plus the 6-month extension period immediately before you filed the claim. The estimated tax of $500 paid before that period can’t be refunded or credited. If you file a claim more than 3 years after you file your return, the credit or refund can’t be more than the tax you paid within the 2 years immediately before you file the claim.
Example. You filed your 2017 tax return on April 15, 2018. You paid taxes of $500. On November 5, 2019, after an examination of your 2017 return, you had to pay an additional tax of $200. On May 12, 2021, you file a claim for a refund of $300. However, because you filed your claim more than 3 years after you filed your return, your refund will be limited to the $200 you paid during the 2 years immediately before you filed your claim. The IRS provides a direct method to move your claim to court if:
When you file your claim with the IRS, you get the direct method by requesting in writing that your claim be immediately rejected. A notice of claim disallowance will be sent to you. You have 2 years from the date of mailing of the notice of claim disallowance to file a refund suit in the U.S. District Court having jurisdiction or in the U.S. Court of Federal Claims.
The law provides penalties for failure to file returns or pay taxes as required.
You may be subject to criminal prosecution (brought to trial) for actions such as:
Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. To reduce your risk:
If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter. If your SSN has been lost or stolen or you suspect you are a victim of tax-related identity theft, visit IRS.gov/IdentityTheft to learn what steps you should take. For more information, see Pub. 5027. . Victims of identity theft who are experiencing economic harm or a systemic problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the National Taxpayer Advocate helpline at 877-777-4778 or 800-829-4059 (TTY/TDD). Deaf or hard-of-hearing individuals can also contact the IRS through relay services such as the Federal Relay Service, available at GSA.gov/fedrelay.
Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common form is the act of sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. The IRS doesn't initiate contacts with taxpayers via emails. Also, the IRS doesn't request detailed personal information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts. If you receive an unsolicited email claiming to be from the IRS, forward the message to . You may also report misuse of the IRS name, logo, forms, or other IRS property to the Treasury Inspector General for Tax Administration toll free at 800-366-4484. You can forward suspicious emails to the Federal Trade Commission (FTC) at or report them at ftc.gov/complaint. You can contact them at ftc.gov/idtheft or 877-IDTHEFT (877-438-4338). If you have been a victim of identity theft, see IdentityTheft.gov or Pub. 5027. People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 866-653-4261. Go to IRS.gov/IDProtection to learn more about identity theft and how to reduce your risk.
This chapter helps you determine which filing status to use. There are five filing statuses.
. You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 10), and your tax (chapter 11). You also use your filing status to determine whether you are eligible to claim certain deductions and credits. You may want to see:
Publication
For these and other useful items, go to IRS.gov/Forms.
Your filing status is single if you are considered unmarried and you don’t qualify for another filing status. To determine your marital status, see Marital Status, earlier.
You can choose married filing jointly as your filing status if you are considered married and both you and your spouse agree to file a joint return. On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions. If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you don’t itemize deductions) may be higher, and you may qualify for tax benefits that don’t apply to other filing statuses. .
You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. If you and your spouse don’t agree to file a joint return, you must use this filing status unless you qualify for head of household status, discussed later. You may be able to choose head of household filing status if you are considered unmarried because you live apart from your spouse and meet certain tests (explained under Head of Household, later). This can apply to you even if you aren't divorced or legally separated. If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other benefits, and your standard deduction will be higher. The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions. See Head of Household, later, for more information. .
If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.
You can change your filing status from a separate return to a joint return by filing an amended return using Form 1040-X. You can generally change to a joint return any time within 3 years from the due date of the separate return or returns. This doesn't include any extensions. A separate return includes a return filed by you or your spouse claiming married filing separately, single, or head of household filing status.
Once you file a joint return, you can’t choose to file separate returns for that year after the due date of the return.
You may be able to file as head of household if you meet all of the following requirements.
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To qualify for head of household status, you must be either unmarried or considered unmarried on the last day of the year. You are considered unmarried on the last day of the tax year if you meet all of the following tests.
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To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2-1.
See Table 2-1 to see who is a qualifying person. Any person not described in Table 2-1 isn't a qualifying person.
Example 1—Child. Your unmarried son lived with you all year and was 18 years old at the end of the year. He didn't provide more than half of his own support and doesn't meet the tests to be a qualifying child of anyone else. As a result, he is your qualifying child (see Qualifying Child in chapter 3) and, because he is single, your qualifying person for head of household purposes.
Example 2—Child who isn't qualifying person. The facts are the same as in Example 1, except your son was 25 years old at the end of the year and his gross income was $5,000. Because he doesn't meet the age test (explained under Qualifying Child in chapter 3), your son isn't your qualifying child. Because he doesn't meet the gross income test (explained under Qualifying Relative in chapter 3), he isn't your qualifying relative. As a result, he isn't your qualifying person for head of household purposes.
Example 3—Girlfriend. Your girlfriend lived with you all year. Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she isn't your qualifying person for head of household purposes because she isn't related to you in one of the ways listed under Relatives who don’t have to live with you in chapter 3. See Table 2-1.
Example 4—Girlfriend's child. The facts are the same as in Example 3, except your girlfriend's 10-year-old son also lived with you all year. He isn't your qualifying child and, because he is your girlfriend's qualifying child, he isn't your qualifying relative (see Not a Qualifying Child Test in chapter 3). As a result, he isn't your qualifying person for head of household purposes.
If your spouse died in 2021, you can use married filing jointly as your filing status for 2021 if you otherwise qualify to use that status. The year of death is the last year for which you can file jointly with your deceased spouse. See Married Filing Jointly, earlier. You may be eligible to use qualifying widow(er) as your filing status for 2 years following the year your spouse died. For example, if your spouse died in 2020, and you haven't remarried, you may be able to use this filing status for 2021 and 2022. This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you don’t itemize deductions). It doesn't entitle you to file a joint return. .
This chapter discusses the following topics.
Publication
Form (and Instructions)
The term “dependent” means:
The terms qualifying child and qualifying relative are defined later. All the requirements for claiming a dependent are summarized in Table 3-1.
Even if you have a qualifying child or qualifying relative, you can claim that person as a dependent only if these three tests are met.
These three tests are explained in detail here.
If you can be claimed as a dependent by another taxpayer, you can’t claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you can’t claim that person as a dependent. If you are filing a joint return and your spouse can be claimed as a dependent by another taxpayer, you and your spouse can’t claim any dependents on your joint return.
You generally can’t claim a married person as a dependent if he or she files a joint return.
Example 1—Child files joint return. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $35,000 for the year. The couple files a joint return. You can’t claim your daughter as a dependent.
Example 2—Child files joint return only as claim for refund of withheld tax. Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. They lived with you all year. Neither is required to file a tax return. They don’t have a child. Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so you aren't disqualified from claiming each of them as a dependent just because they file a joint return. You can claim each of them as a dependent if all the other tests to do so are met.
Example 3—Child files joint return to claim American opportunity credit. The facts are the same as in Example 2, except no taxes were taken out of your son's pay or his wife's pay. However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Because claiming the American opportunity credit is their reason for filing the return, they aren't filing it only to get a refund of income tax withheld or estimated tax paid. The exception to the joint return test doesn't apply, so you can’t claim either of them as a dependent.
You generally can’t claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an exception for certain adopted children, as explained next.
Five tests must be met for a child to be your qualifying child. The five tests are:
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To meet this test, a child must be:
To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.
Example 1—Child lived with one parent for a greater number of nights. You and your child’s other parent are divorced. In 2021, your child lived with you 210 nights and with the other parent 155 nights. You are the custodial parent.
Example 2—Child is away at camp. In 2021, your daughter lives with each parent for alternate weeks. In the summer, she spends 6 weeks at summer camp. 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 hadn’t attended summer camp.
Example 3—Child lived same number of nights with each parent. Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. Your AGI is $40,000. Your ex-spouse's AGI is $25,000. You are treated as your son's custodial parent because you have the higher AGI.
Example 4—Child is at parent’s home but with other parent. Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. You become ill and are hospitalized. The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. Your son is treated as living with you during this 10-day period because he was living in your home.
Example 5—Child emancipated in May. When your son turned age 18 in May 2021, he became emancipated under the law of the state where he lives. As a result, he isn't considered in the custody of his parents for more than half of the year. The special rule for children of divorced or separated parents doesn't apply.
Example 6—Child emancipated in August. Your daughter lives with you from January 1, 2021, until May 31, 2021, and lives with her other parent, your ex-spouse, from June 1, 2021, through the end of the year. She turns 18 and is emancipated under state law on August 1, 2021. 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 2021. You are the custodial parent.
To meet this test, the child can’t have provided more than half of his or her own support for the year. This test is different from the support test to be a qualifying relative, which is described later. However, to see what is or isn't support, see Support Test (To Be a Qualifying Relative), later. If you aren't sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful.
Example. You provided $4,000 toward your 16-year-old son's support for the year. He has a part-time job and provided $6,000 to his own support. He provided more than half of his own support for the year. He isn't your qualifying child.
Foster care payments and expenses. Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county. If you aren't in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions but aren't considered support you provided. For more information about the deduction for charitable contributions, see Pub. 526. If your unreimbursed expenses aren't deductible as charitable contributions, they may qualify as support you provided. If you are in the trade or business of providing foster care, your unreimbursed expenses aren't considered support provided by you.
Example 1. Lauren, a foster child, lived with Mr. and Mrs. Smith for the last 3 months of the year. The Smiths cared for Lauren because they wanted to adopt her (although she hadn’t been placed with them for adoption). They didn't care for her as a trade or business or to benefit the agency that placed her in their home. The Smiths' unreimbursed expenses aren't deductible as charitable contributions but are considered support they provided for Lauren.
Example 2. You provided $3,000 toward your 10-year-old foster child's support for the year. The state government provided $4,000, which is considered support provided by the state, not by the child. See Support provided by the state (welfare, food stamps, housing, etc.), later. Your foster child didn't provide more than half of her own support for the year.
To meet this test, the child can’t file a joint return for the year.
Example 1—Child files joint return. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $35,000 for the year. The couple files a joint return. Because your daughter and her husband file a joint return, she isn't your qualifying child.
Example 2—Child files joint return only as a claim for refund of withheld tax. Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. They lived with you all year. Neither is required to file a tax return. They don’t have a child. Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met.
Example 3—Child files joint return to claim American opportunity credit. The facts are the same as in Example 2, except no taxes were taken out of your son's pay or his wife's pay. However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Because claiming the American opportunity credit is their reason for filing the return, they aren't filing it only to get a refund of income tax withheld or estimated tax paid. The exception to the joint return test doesn't apply, so your son isn't your qualifying child.
. . Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, generally only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).
The other person can’t take any of these benefits based on this qualifying child. In other words, you and the other person can’t agree to divide these benefits between you.
Example 1—Child lived with parent and grandparent. You and your 3-year-old daughter Jane lived with your mother all year. You are 25 years old, unmarried, and your AGI is $9,000. Your mother's AGI is $15,000. Jane's father didn't live with you or your daughter. You haven't signed Form 8332 (or a similar statement). Jane is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. However, only one of you can claim her. Jane isn't a qualifying child of anyone else, including her father. You agree to let your mother claim Jane. This means your mother can claim Jane as a qualifying child for all of the five tax benefits listed earlier, if she qualifies for each of those benefits (and if you don’t claim Jane as a qualifying child for any of those tax benefits).
Example 2—Parent has higher AGI than grandparent. The facts are the same as in Example 1, except your AGI is $18,000. Because your mother's AGI isn't higher than yours, she can’t claim Jane. Only you can claim Jane.
Example 3—Two persons claim same child. The facts are the same as in Example 1, except that you and your mother both claim Jane as a qualifying child. In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. The IRS will disallow your mother's claim to the five tax benefits listed earlier based on Jane. However, your mother may qualify for the earned income credit as a taxpayer without a qualifying child.
Example 4—Qualifying children split between two persons. The facts are the same as in Example 1, except you also have two other young children who are qualifying children of both you and your mother. Only one of you can claim each child. However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. For example, if you claim one child, your mother can claim the other two.
Example 5—Taxpayer who is a qualifying child. The facts are the same as in Example 1, except you are only 18 years old and didn't provide more than half of your own support for the year. This means you are your mother's qualifying child. If she can claim you as a dependent, then you can’t claim your daughter as a dependent because of the Dependent Taxpayer Test, explained earlier.
Example 6—Separated parents. You, your husband, and your 10-year-old son lived together until August 1, 2021, when your husband moved out of the household. In August and September, your son lived with you. For the rest of the year, your son lived with your husband, the boy's father. 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. At the end of the year, you and your husband still weren't divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) doesn't apply. You and your husband will file separate returns. Your husband agrees to let you treat your son as a qualifying child. This means, if your husband doesn't claim your son as a qualifying child, you can claim your son as a qualifying child for the child tax credit and exclusion for dependent care benefits (if you qualify for each of those tax benefits). However, you can’t claim head of household filing status because you and your husband didn't live apart for the last 6 months of the year. As a result, your filing status is married filing separately, so you can’t claim the earned income credit because you and your husband didn't live apart for the last 6 months of 2021, and you aren't legally separated under a written separation agreement or decree of separate maintenance. Therefore, you don't meet the requirements to take the earned income credit as married filing separately. You also can't take the credit for child and dependent care expenses because your fling status is married filing separately and you and your husband didn't live apart for the last 6 months of 2021.
Example 7—Separated parents claim same child. The facts are the same as in Example 6, except that you and your husband both claim your son as a qualifying child. In this case, only your husband will be allowed to treat your son as a qualifying child. This is because, during 2021, the boy lived with him longer than with you. If you claimed the child tax credit for your son, the IRS will disallow your claim to the child tax credit. If you don’t have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. In addition, because you and your husband didn't live apart for the last 6 months of the year, your husband can’t claim head of household filing status. As a result, his filing status is married filing separately, so he can’t claim the earned income credit because you and your husband didn't live apart for the last 6 months of 2021, and you aren't legally separated under a written separation agreement or decree of separate maintenance. Therefore, your husband doesn't meet the requirements to take the earned income credit as married filing separately. Your husband also can't take the credit for child and dependent care expenses because his filing status is married filing separately and you and your husband didn't live apart for the last 6 months of 2021.
Example 8—Unmarried parents. You, your 5-year-old son, and your son's father lived together all year. You and your son's father aren't married. Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. Your AGI is $12,000 and your son's father's AGI is $14,000. Your son's father agrees to let you claim the child as a qualifying child. This means you can claim him as a qualifying child for the child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father doesn't claim your son as a qualifying child for any of those tax benefits).
Example 9—Unmarried parents claim same child. The facts are the same as in Example 8, except that you and your son's father both claim your son as a qualifying child. In this case, only your son's father will be allowed to treat your son as a qualifying child. This is because his AGI, $14,000, is more than your AGI, $12,000. If you claimed the child tax credit for your son, the IRS will disallow your claim to this credit. If you don’t have another qualifying child or dependent, the IRS will also disallow your claim to head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. However, you may be able to claim the earned income credit as a taxpayer without a qualifying child.
Example 10—Child didn't live with a parent. You and your 7-year-old niece, your sister's child, lived with your mother all year. You are 25 years old, and your AGI is $9,300. Your mother's AGI is $15,000. Your niece's parents file jointly, have an AGI of less than $9,000, and don’t live with you or their child. Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. However, only your mother can treat her as a qualifying child. This is because your mother's AGI, $15,000, is more than your AGI, $9,300.
Example 1. You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Your AGI is $10,000. Your mother's AGI is $25,000. Your son's father didn't live with you or your son. Under the rules explained earlier 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 the child tax credit for him. Because of this, you can’t claim the child tax credit for your son. However, those rules don't allow your son's father to 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, the earned income credit, or the health coverage tax credit. You and your mother didn't have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. Also, neither of you qualifies for the health coverage tax credit. 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. (The support test doesn't apply for the earned income credit.) However, you agree to let your mother claim your son. 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 don’t claim him as a qualifying child for the earned income credit. (You can’t claim head of household filing status because your mother paid the entire cost of keeping up the home.) You may be able to claim the earned income credit as a taxpayer without a qualifying child.
Example 2. The facts are the same as in Example 1, except your AGI is $25,000 and your mother's AGI is $21,000. Your mother can’t claim your son as a qualifying child for any purpose because her AGI isn't higher than yours.
Example 3. The facts are the same as in Example 1, except you and your mother both claim your son as a qualifying child for the earned income credit. Your mother also claims him as a qualifying child for head of household filing status. 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. The IRS will disallow your mother's claim to head of household filing status unless she has another qualifying child or dependent. Your mother can't claim the earned income credit as a taxpayer without a qualifying child because her AGI is more than $21,430.
Four tests must be met for a person to be your qualifying relative. The four tests are:
A child isn't your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer.
Example 1. Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. She isn't your qualifying relative.
Example 2. Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. He isn't your qualifying relative.
Example 3. Your son lives with you but isn't your qualifying child because he is 30 years old and doesn't meet the age test. He may be your qualifying relative if the gross income test and the support test are met.
Example 4. Your 13-year-old grandson lived with his mother for 3 months, with his uncle for 4 months, and with you for 5 months during the year. He isn't your qualifying child because he doesn't meet the residency test. He may be your qualifying relative if the gross income test and the support test are met.
Child of person not required to file a return. A child isn't the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) isn't required to file an income tax return and either:
Example 1—Return not required. You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. Your friend has no gross income, isn't required to file a 2021 tax return, and doesn't file a 2021 tax return. Both your friend and her child are your qualifying relatives if the support test is met.
Example 2—Return filed to claim refund. The facts are the same as in Example 1, except your friend had wages of $1,500 during the year and had income tax withheld from her wages. She files a return only to get a refund of the income tax withheld and doesn't claim the earned income credit or any other tax credits or deductions. Both your friend and her child are your qualifying relatives if the support test is met.
Example 3—Earned income credit claimed. The facts are the same as in Example 2, except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. Your friend's child is the qualifying child of another taxpayer (your friend), so you can’t claim your friend's child as your qualifying relative. Also, you can’t claim your friend as your qualifying relative because of the gross income test explained later.
Child in Canada or Mexico. You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. If the child doesn't live with you, the child doesn't meet the residency test to be your qualifying child. However, the child may still be your qualifying relative. If the persons the child does live with aren't U.S. citizens and have no U.S. gross income, those persons aren't “taxpayers,” so the child isn't the qualifying child of any other taxpayer. If the child isn't the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met. You can’t claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U.S. citizen, U.S. resident alien, or U.S. national. There is an exception for certain adopted children who lived with you all year. See Citizen or Resident Test, earlier.
Example. You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. You are single and live in the United States. Your mother isn't a U.S. citizen and has no U.S. income, so she isn't a “taxpayer.” Your children aren't your qualifying children because they don’t meet the residency test. But since they aren't the qualifying children of any other taxpayer, they may be your qualifying relatives and you may be permitted to claim them as dependents. You may also be able to claim your mother as a dependent if the gross income and support tests are met.
To meet this test, a person's gross income for the year must be less than $4,300.
Gross income defined. Gross income is all income in the form of money, property, and services that isn't exempt from tax. In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business. Gross receipts from rental property are gross income. Don’t deduct taxes, repairs, or other expenses to determine the gross income from rental property. Gross income includes a partner's share of the gross (not a share of the net) partnership income. Gross income also includes all taxable unemployment compensation, taxable social security benefits, and certain amounts received as scholarship and fellowship grants. Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally aren't included in gross income. For more information about scholarships, see chapter 8. Permanently and totally disabled has the same meaning here as under Qualifying Child, earlier.
To figure if you provided more than half of a person's support, you must first determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Generally, the amount of an item of support is the amount of the expense incurred in providing that item. For lodging, the amount of support is the fair rental value of the lodging. Expenses not directly related to any one member of a household, such as the cost of food for the household, must be divided among the members of the household.
Example 1. Grace Brown, mother of Mary Miller, lives with Frank and Mary Miller and their two children. Grace gets social security benefits of $2,400, which she spends for clothing, transportation, and recreation. Grace has no other income. Frank and Mary's total food expense for the household is $5,200. They pay Grace's medical and drug expenses of $1,200. The fair rental value of the lodging provided for Grace is $1,800 a year, based on the cost of similar rooming facilities. Figure Grace's total support as follows. The support Frank and Mary provide, $4,040 ($1,800 lodging + $1,200 medical expenses + $1,040 food), is more than half of Grace's $6,440 total support.
Example 2. Your parents live with you, your spouse, and your two children in a house you own. The fair rental value of your parents' share of the lodging is $2,000 a year ($1,000 each), which includes furnishings and utilities. Your father receives a nontaxable pension of $4,200, which he spends equally between your mother and himself for items of support such as clothing, transportation, and recreation. Your total food expense for the household is $6,000. Your heat and utility bills amount to $1,200. Your mother has hospital and medical expenses of $600, which you pay during the year. Figure your parents' total support as follows. You must apply the support test separately to each parent. You provide $2,000 ($1,000 lodging + $1,000 food) of your father's total support of $4,100—less than half. You provide $2,600 to your mother ($1,000 lodging + $1,000 food + $600 medical)—more than half of her total support of $4,700. You meet the support test for your mother, but not your father. Heat and utility costs are included in the fair rental value of the lodging, so these aren't considered separately.
Fair rental value defined. Fair rental value is the amount you could reasonably expect to receive from a stranger for the same kind of lodging. It is used instead of actual expenses such as taxes, interest, depreciation, paint, insurance, utilities, and the cost of furniture and appliances. In some cases, fair rental value may be equal to the rent paid. If you provide the total lodging, the amount of support you provide is the fair rental value of the room the person uses, or a share of the fair rental value of the entire dwelling if the person has use of your entire home. If you don’t provide the total lodging, the total fair rental value must be divided depending on how much of the total lodging you provide. If you provide only a part and the person supplies the rest, the fair rental value must be divided between both of you according to the amount each provides.
Example. Your parents live rent free in a house you own. It has a fair rental value of $5,400 a year furnished, which includes a fair rental value of $3,600 for the house and $1,800 for the furniture. This doesn't include heat and utilities. The house is completely furnished with furniture belonging to your parents. You pay $600 for their utility bills. Utilities usually aren't included in rent for houses in the area where your parents live. Therefore, you consider the total fair rental value of the lodging to be $6,000 ($3,600 fair rental value of the unfurnished house + $1,800 allowance for the furnishings provided by your parents + $600 cost of utilities) of which you are considered to provide $4,200 ($3,600 + $600).
Capital expenses. Capital items, such as furniture, appliances, and cars, bought for a person during the year can be included in total support under certain circumstances. The following examples show when a capital item is or isn't support.
Example 1. You buy a $200 power lawn mower for your 13-year-old child. The child is given the duty of keeping the lawn trimmed. Because the lawn mower benefits all members of the household, don’t include the cost of the lawn mower in the support of your child.
Example 2. You buy a $150 television set as a birthday present for your 12-year-old child. The television set is placed in your child's bedroom. You can include the cost of the television set in the support of your child.
Example 3. You pay $5,000 for a car and register it in your name. You and your 17-year-old daughter use the car equally. Because you own the car and don’t give it to your daughter but merely let her use it, don’t include the cost of the car in your daughter's total support. However, you can include in your daughter's support your out-of-pocket expenses of operating the car for her benefit.
Example 4. Your 17-year-old son, using personal funds, buys a car for $4,500. You provide the rest of your son's support, $4,000. Because the car is bought and owned by your son, the car's fair market value ($4,500) must be included in his support. Your son has provided more than half of his own total support of $8,500 ($4,500 + $4,000), so he isn't your qualifying child. You didn't provide more than half of his total support, so he isn't your qualifying relative. You can’t claim your son as a dependent.
The following items aren't included in total support.
Sometimes no one provides more than half of the support of a person. Instead, two or more persons, each of whom would be able to claim the person as a dependent but for the support test, together provide more than half of the person's support. When this happens, you can agree that any one of you who individually provides more than 10% of the person's support, but only one, can claim the person as a dependent. Each of the others must sign a statement agreeing not to claim the person as a dependent for that year. The person who claims the person as a dependent must keep these signed statements for his or her records. A multiple support declaration identifying each of the others who agreed not to claim the person as a dependent must be attached to the return of the person claiming the person as a dependent. Form 2120 can be used for this purpose. You can claim someone as a dependent under a multiple support agreement for someone related to you or for someone who lived with you all year as a member of your household.
Example 1. You, your sister, and your two brothers provide the entire support of your mother for the year. You provide 45%, your sister 35%, and your two brothers each provide 10%. Either you or your sister can claim your mother as a dependent. The other must sign a statement agreeing not to claim your mother as a dependent. The one who claims your mother as a dependent must attach Form 2120, or a similar declaration, to his or her return and must keep the statement signed by the other for his or her records. Because neither brother provides more than 10% of the support, neither can claim your mother as a dependent and neither has to sign a statement.
Example 2. You and your brother each provide 20% of your mother's support for the year. The remaining 60% of her support is provided equally by two persons who aren't related to her. She doesn't live with them. Because more than half of her support is provided by persons who can’t claim her as a dependent, no one can claim her as a dependent.
Example 3. Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother (your uncle), and 11% from a friend. Either you or your uncle can claim your father as a dependent if the other signs a statement agreeing not to. The one who claims your father as a dependent must attach Form 2120, or a similar declaration, to his return and must keep for his records the signed statement from the one agreeing not to claim your father as a dependent.
In most cases, a child of divorced or separated parents (or parents who live apart) will be a qualifying child of one of the parents. See Children of divorced or separated parents (or parents who live apart) under Qualifying Child, earlier. However, if the child doesn't meet the requirements to be a qualifying child of either parent, the child may be a qualifying relative of one of the parents. If you think this might apply to you, see Pub. 501.
You must show the social security number (SSN) of any dependent you list in the Dependents section of your Form 1040 or 1040-SR. .
Tax law changes for 2022. When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2022. For more information, see Pub. 505, Tax Withholding and Estimated Tax.
Estimated tax safe harbor for higher income taxpayers. If your 2021 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected tax for 2022 or 110% of the tax shown on your 2021 return to avoid an estimated tax penalty.
This chapter discusses how to pay your tax as you earn or receive income during the year. In general, the federal income tax is a pay-as-you-go tax. There are two ways to pay as you go.
This chapter explains these methods. In addition, it also explains the following.
Publication
Form (and Instructions)
This section discusses income tax withholding on:
This section also covers backup withholding on interest, dividends, and other payments.
Income tax is withheld from the pay of most employees. Your pay includes your regular pay, bonuses, commissions, and vacation allowances. It also includes reimbursements and other expense allowances paid under a nonaccountable plan. See Supplemental Wages, later, for more information about reimbursements and allowances paid under a nonaccountable plan. If your income is low enough that you won't have to pay income tax for the year, you may be exempt from withholding. This is explained under Exemption From Withholding, later. You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. If your employer doesn't agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2022.
The amount of income tax your employer withholds from your regular pay depends on two things.
Form W-4 includes steps to help you figure your withholding. Complete Steps 2 through 4 only if they apply to you.
When you start a new job, you must fill out Form W-4 and give it to your employer. Your employer should have copies of the form. If you need to change the information later, you must fill out a new form. If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. You may be able to avoid overwithholding if your employer agrees to use the part-year method. See Part-Year Method in chapter 1 of Pub. 505 for more information.
During the year, changes may occur to your marital status, adjustments, deductions, or credits you expect to claim on your tax return. When this happens, you may need to give your employer a new Form W-4 to change your withholding status. If a change in personal circumstances reduces the amount of withholding you are entitled to claim, you are required to give your employer a new Form W-4 within 10 days after the change occurs.
After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund. Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability.
You can’t give your employer a payment to cover withholding on salaries and wages for past pay periods or a payment for estimated tax.
Form W-4 has worksheets to help you figure the correct amount of withholding you can claim. The worksheets are for your own records. Don't give them to your employer.
In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules.
But because the worksheets and withholding methods don't account for all possible situations, you may not be getting the right amount withheld. This is most likely to happen in the following situations.
To make sure you are getting the right amount of tax withheld, get Pub. 505. It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. It will also help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. If you don't have enough tax withheld, you may have to pay estimated tax, as explained under Estimated Tax for 2022, later. .
It may be helpful for you to know some of the withholding rules your employer must follow. These rules can affect how to fill out your Form W-4 and how to handle problems that may arise.
If you claim exemption from withholding, your employer won't withhold federal income tax from your wages. The exemption applies only to income tax, not to social security, Medicare, or FUTA tax withholding. You can claim exemption from withholding for 2022 only if both of the following situations apply.
Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. The payer can figure withholding on supplemental wages using the same method used for your regular wages. However, if these payments are identified separately from your regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate.
You may have to pay a penalty of $500 if both of the following apply.
There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both. These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. A simple error or an honest mistake won't result in one of these penalties.
The tips you receive while working on your job are considered part of your pay. You must include your tips on your tax return on the same line as your regular pay. However, tax isn't withheld directly from tip income, as it is from your regular pay. Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay. For more information on reporting your tips to your employer and on the withholding rules for tip income, see Pub. 531, Reporting Tip Income.
The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Your employer must generally withhold income tax on these benefits from your regular pay. For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5. Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Your employer must notify you if this choice is made. For more information on withholding on taxable fringe benefits, see chapter 1 of Pub. 505.
Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. To qualify as sick pay, it must be paid under a plan to which your employer is a party. If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. An agent who doesn't pay regular wages to you may choose to withhold income tax at a flat rate. However, if you receive sick pay from a third party who isn't acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. See Form W-4S, later. If you receive payments under a plan in which your employer doesn't participate (such as an accident or health plan where you paid all the premiums), the payments aren’t sick pay and usually aren’t taxable.
Income tax will usually be withheld from your pension or annuity distributions unless you choose not to have it withheld. This rule applies to distributions from:
The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Income tax withholding from an ERD is mandatory.
Income tax is withheld at a flat 24% rate from certain kinds of gambling winnings. Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding.
If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Underpayment Penalty for 2021 at the end of this chapter.
You can choose to have income tax withheld from unemployment compensation. To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. All unemployment compensation is taxable. If you don't have income tax withheld, you may have to pay estimated tax. See Estimated Tax for 2022, later. If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Underpayment Penalty for 2021 at the end of this chapter.
You can choose to have income tax withheld from certain federal payments you receive. These payments are the following.
To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. If you don't choose to have income tax withheld, you may have to pay estimated tax. See Estimated Tax for 2022, later. If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Underpayment Penalty for 2021 at the end of this chapter.
Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. The information return shows how much you were paid during the year. It also includes your name and taxpayer identification number (TIN). TINs are explained in chapter 1 under Social Security Number (SSN). These payments generally aren’t subject to withholding. However, “backup” withholding is required in certain situations. Backup withholding can apply to most kinds of payments that are reported on Form 1099. The payer must withhold at a flat 24% rate in the following situations.
Go to IRS.gov/Businesses/Small-Businesses-Self-Employed/Backup-Withholding for more information on kinds of payments subject to backup withholding.
Estimated tax is the method used to pay tax on income that isn't subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income isn't enough. Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. If you don't pay enough by the due date of each payment period (see When To Pay Estimated Tax, later), you may be charged a penalty even if you are due a refund when you file your tax return. For information on when the penalty applies, see Underpayment Penalty for 2021 at the end of this chapter.
If you receive salaries or wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. To do this, give a new Form W-4 to your employer. See chapter 1 of Pub. 505.
If you owe additional tax for 2021, you may have to pay estimated tax for 2022. You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax payments.
2021 joint return and 2022 separate returns. If you plan to file a separate return for 2022 but you filed a joint return for 2021, your 2021 tax is your share of the tax on the joint return. You file a separate return if you file as single, head of household, or married filing separately. To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2021 using the same filing status as for 2022. Then, multiply the tax on the joint return by the following fraction.
Example. Joe and Heather filed a joint return for 2021 showing taxable income of $48,500 and a tax of $5,425. Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. For 2022, they plan to file married filing separately. Joe figures his share of the tax on the 2021 joint return as follows.
To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year. When figuring your 2022 estimated tax, it may be helpful to use your income, deductions, and credits for 2021 as a starting point. Use your 2021 federal tax return as a guide. You can use Form 1040-ES and Pub. 505 to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) and Pub. 505 to figure estimated tax (see chapter 8 of Pub. 519 for more information). You must make adjustments both for changes in your own situation and for recent changes in the tax law. For a discussion of these changes, visit IRS.gov. For more complete information on how to figure your estimated tax for 2022, see chapter 2 of Pub. 505.
For estimated tax purposes, the tax year is divided into four payment periods. Each period has a specific payment due date. If you don't pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. The payment periods and due dates for estimated tax payments are shown next.
You don't have to make estimated tax payments until you have income on which you will owe income tax. If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. You can pay all your estimated tax at that time, or you can pay it in installments. If you choose to pay in installments, make your first payment by the due date for the first payment period. Make your remaining installment payments by the due dates for the later periods.
You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. You can figure your required payment for each period by using either the regular installment method or the annualized income installment method. These methods are described in chapter 2 of Pub. 505. If you don't pay enough during each payment period, you may be charged a penalty even if you are due a refund when you file your tax return. If the earlier discussion of No income subject to estimated tax during first period or the later discussion of Change in estimated tax applies to you, you may benefit from reading Annualized Income Installment Method in chapter 2 of Pub. 505 for information on how to avoid a penalty.
You don't have to pay estimated tax if your withholding in each payment period is at least as much as:
There are several ways to pay estimated tax.
If you show an overpayment of tax after completing your Form 1040 or 1040-SR for 2021, you can apply part or all of it to your estimated tax for 2022. On line 36 of Form 1040 or 1040-SR, enter the amount you want credited to your estimated tax rather than refunded. Take the amount you have credited into account when figuring your estimated tax payments. You can’t have any of the amount you credited to your estimated tax refunded to you until you file your tax return for the following year. You also can’t use that overpayment in any other way.
The IRS offers an electronic payment option that is right for you. Paying online is convenient, secure, and helps make sure we get your payments on time. To pay your taxes online or for more information, go to IRS.gov/Payments. You can pay using any of the following methods.
Paying by phone is another safe and secure method of paying electronically. Use one of the following methods: (1) call one of the debit or credit card providers, or (2) use the Electronic Federal Tax Payment System (EFTPS).
To pay through your mobile device, download the IRS2Go application.
Cash is an in-person payment option for individuals provided through retail partners with a maximum of $1,000 per day per transaction. To make a cash payment, you must first be registered online at www.fed.acipayonline.com, our Official Payment provider.
Before submitting a payment through the mail using the estimated tax payment voucher, please consider alternative methods. One of our safe, quick, and easy electronic payment options might be right for you. If you choose to mail in your payment, each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. During 2021, if you:
then you should receive a copy of the 2022 Form 1040-ES with payment vouchers. The enclosed payment vouchers will be preprinted with your name, address, and social security number. Using the preprinted vouchers will speed processing, reduce the chance of error, and help save processing costs. Use the window envelopes that came with your Form 1040-ES package. If you use your own envelopes, make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live.
These criteria can change without notice. If you don't receive a Form 1040-ES package and you are required to make an estimated tax payment, you should go to IRS.gov/Form1040ES and print a copy of Form 1040-ES that includes four blank payment vouchers. Complete one of these and make your payment timely to avoid penalties for paying late. . If you didn't pay estimated tax last year, you can order Form 1040-ES from the IRS (see the inside back cover of this publication) or download it from IRS.gov. Follow the instructions to make sure you use the vouchers correctly.
When you file your 2021 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Also take credit for the estimated tax you paid for 2021. These credits are subtracted from your total tax. Because these credits are refundable, you should file a return and claim these credits, even if you don't owe tax.
If you had income tax withheld during 2021, you should be sent a statement by January 31, 2022, showing your income and the tax withheld. Depending on the source of your income, you should receive:
Your employer is required to provide or send Form W-2 to you no later than January 31, 2022. You should receive a separate Form W-2 from each employer you worked for. If you stopped working before the end of 2021, your employer could have given you your Form W-2 at any time after you stopped working. However, your employer must provide or send it to you by January 31, 2022. If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. If you haven't received your Form W-2 by January 31, you should ask your employer for it. If you don't receive it by early February, call the IRS. Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Include the federal income tax withheld (as shown in box 2 of Form W-2) on Form 1040 or 1040-SR, line 25a. In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay.
If you had gambling winnings in 2021, the payer may have withheld income tax. If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Report the amounts you won on Schedule 1 (Form 1040). Take credit for the tax withheld on Form 1040 or 1040-SR, line 25c.
Most forms in the 1099 series aren’t filed with your return. These forms should be furnished to you by January 31, 2022 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by February 15, 2022). Unless instructed to file any of these forms with your return, keep them for your records. There are several different forms in this series, which are not listed. See the instructions for the specific Form 1099 for more information.
If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Call the telephone number or write to the address given for the payer on the form. The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. In certain situations, you will receive two forms in place of the original incorrect form. This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV, Dividends and Distributions, instead of a Form 1099-INT, Interest Income). One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. This form will have an “X” in the “CORRECTED” box at the top of the form. The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box won't be checked).
If you file your return and you later receive a form for income that you didn't include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040-X, Amended U.S. Individual Income Tax Return.
If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Don't include any amount withheld from your spouse's income. However, different rules may apply if you live in a community property state. Community property states are listed in chapter 2. For more information on these rules, and some exceptions, see Pub. 555, Community Property.
Take credit for all your estimated tax payments for 2021 on Form 1040 or 1040-SR, line 26. Include any overpayment from 2020 that you had credited to your 2021 estimated tax.
If you and your spouse made separate estimated tax payments for 2021 and you file separate returns, you can take credit only for your own payments. If you made joint estimated tax payments, you must decide how to divide the payments between your returns. One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. If you can’t agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2021.
If you made joint estimated tax payments for 2021, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. If you can’t agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2021. If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided on the front of Form 1040 or 1040-SR. If you divorced and remarried in 2021, enter your present spouse's SSN in the space provided on the front of Form 1040 or 1040-SR. Also, on the dotted line next to line 26, enter your former spouse’s SSN, followed by “DIV.”
If you didn't pay enough tax, either through withholding or by making timely estimated tax payments, you will have an underpayment of estimated tax and you may have to pay a penalty. Generally, you won't have to pay a penalty for 2021 if any of the following apply.
The five chapters in this part discuss many kinds of income and adjustments to income. They explain which income is and isn’t taxed and discuss some of the adjustments to income that you can make in figuring your adjusted gross income. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:
Deferred compensation contribution limit. If you participate in a 401(k) plan, 403(b) plan, or the federal government's Thrift Savings Plan, the total annual amount you can contribute remains at $19,500 for 2021. This also applies to most 457 plans.
This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. The following topics are included.
The chapter explains what income is included and isn’t included in the employee's gross income and what’s not included. You may want to see:
Publication
For these and other useful items, go to IRS.gov/Forms.
This section discusses various types of employee compensation, including fringe benefits, retirement plan contributions, stock options, and restricted property.
Form W-2. If you’re an employee, you should receive a Form W-2 from your employer showing the pay you received for your services. Include your pay on line 1 of Form 1040 or 1040-SR, even if you don’t receive a Form W-2. In some instances, your employer isn’t required to give you a Form W-2. Your employer isn’t required to give you a Form W-2 if you perform household work in your employer's home for less than $2,300 in cash wages during the calendar year and you have no federal income taxes withheld from your wages. Household work is work done in or around an employer's home. Some examples of workers who do household work are:
See Schedule H (Form 1040), Household Employment Taxes, and its instructions, and Pub. 926 for more information. If you performed services, other than as an independent contractor, and your employer didn’t withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040 or 1040-SR. See Form 8919 and its instructions for more information on how to figure unreported wages and taxes and how to include them on your income tax return.
This section discusses different types of employee compensation.
Example. Ben Green received three employee achievement awards during the year: a nonqualified plan award of a watch valued at $250, two qualified plan awards of a stereo valued at $1,000, and a set of golf clubs valued at $500. Assuming that the requirements for qualified plan awards are otherwise satisfied, each award by itself would be excluded from income. However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income.
Nonqualified deferred compensation plans. Your employer may report to you the total amount of deferrals for the year under a nonqualified deferred compensation plan on Form W-2, box 12, using code Y. This amount isn’t included in your income. However, if at any time during the tax year, the plan fails to meet certain requirements, or isn’t operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years to the extent vested and not previously included in income are included in your income for the current year. This amount is included in your wages shown on Form W-2, box 1. It’s also shown on Form W-2, box 12, using code Z.
Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they’re specifically excluded by law. Refraining from the performance of services (for example, under a covenant not to compete) is treated as the performance of services for purposes of these rules.
In most cases, the value of accident or health plan coverage provided to you by your employer isn’t included in your income. Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Benefits. For information on the items covered in this section, other than long-term care coverage, see Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans.
Health savings account (HSA). If you’re an eligible individual, you and any other person, including your employer or a family member, can make contributions to your HSA. Contributions, other than employer contributions, are deductible on your return whether or not you itemize deductions. Contributions made by your employer aren’t included in your income. Distributions from your HSA that are used to pay qualified medical expenses aren’t included in your income. Distributions not used for qualified medical expenses are included in your income. See Pub. 969 for the requirements of an HSA. Contributions by a partnership to a bona fide partner's HSA aren’t contributions by an employer. The contributions are treated as a distribution of money and aren’t included in the partner's gross income. Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are includible in the partner's gross income. In both situations, the partner can deduct the contribution made to the partner's HSA. Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are includible in the shareholder-employee's gross income. The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA.
You may be able to exclude from your income amounts paid or expenses incurred by your employer for qualified adoption expenses in connection with your adoption of an eligible child. See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Adoption benefits are reported by your employer in box 12 of Form W-2 with code T. They are also included as social security and Medicare wages in boxes 3 and 5. However, they aren’t included as wages in box 1. To determine the taxable and nontaxable amounts, you must complete Part III of Form 8839. File the form with your return.
If your employer provides you with a product or service and the cost of it is so small that it would be unreasonable for the employer to account for it, you generally don’t include its value in your income. In most cases, don’t include in your income the value of discounts at company cafeterias, cab fares home when working overtime, and company picnics.
You can exclude from your income up to $5,250 of qualified employer-provided educational assistance. For more information, see Pub. 970, Tax Benefits for Education.
In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) isn’t included in your income. However, you must include in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay toward the purchase of the insurance. For exceptions, see Entire cost excluded and Entire cost taxed, later. If your employer provided more than $50,000 of coverage, the amount included in your income is reported as part of your wages in box 1 of your Form W-2. Also, it’s shown separately in box 12 with code C.
Generally, don’t include the value of qualified retirement planning services provided to you and your spouse by your employer's qualified retirement plan. Qualified services include retirement planning advice, information about your employer's retirement plan, and information about how the plan may fit into your overall individual retirement income plan. You can’t exclude the value of any tax preparation, accounting, legal, or brokerage services provided by your employer.
If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. A qualified transportation fringe benefit is:
Your employer's contributions to a qualified retirement plan for you aren’t included in income at the time contributed. (Your employer can tell you whether your retirement plan is qualified.) However, the cost of life insurance coverage included in the plan may have to be included. See Group-Term Life Insurance, earlier, under Fringe Benefits. If your employer pays into a nonqualified plan for you, you must generally include the contributions in your income as wages for the tax year in which the contributions are made. However, if your interest in the plan isn’t transferable or is subject to a substantial risk of forfeiture (you have a good chance of losing it) at the time of the contribution, you don’t have to include the value of your interest in your income until it’s transferable or is no longer subject to a substantial risk of forfeiture. .
If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you will usually have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. However, if your option is a statutory stock option, you won’t have any income until you sell or exchange your stock. Your employer can tell you which kind of option you hold. For more information, see Pub. 525.
In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. However, if you receive stock or other property that has certain restrictions that affect its value, you don’t include the value of the property in your income until it has substantially vested. (Although you can elect to include the value of the property in your income in the year it’s transferred to you.) For more information, see Restricted Property in Pub. 525.
This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers.
Generally, if you’re a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc., in addition to your salary. If the offering is made to the religious institution, it isn’t taxable to you. If you’re a member of a religious organization and you give your outside earnings to the religious organization, you must still include the earnings in your income. However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. See Pub. 526.
If you’re a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order depends on whether your services are performed for the order.
Payments you receive as a member of a military service are generally taxed as wages except for retirement pay, which is taxed as a pension. Allowances generally aren’t taxed. For more information on the tax treatment of military allowances and benefits, see Pub. 3, Armed Forces' Tax Guide.
This section discusses sickness and injury benefits, including disability pensions, long-term care insurance contracts, workers' compensation, and other benefits. In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. If both you and your employer pay for the plan, only the amount you receive that is due to your employer's payments is reported as income. However, certain payments may not be taxable to you. For information on nontaxable payments, see Military and Government Disability Pensions and Other Sickness and Injury Benefits, later in this discussion. .
If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on line 1 of Form 1040 or 1040-SR until you reach minimum retirement age. Minimum retirement age is generally the age at which you can first receive a pension or annuity if you’re not disabled. . Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension or annuity. Report the payments on lines 5a and 5b of Form 1040 or 1040-SR. The rules for reporting pensions are explained in Disability Pensions in Pub. 575. For information on disability payments from a governmental program provided as a substitute for unemployment compensation, see Unemployment Benefits in chapter 8.
Long-term care insurance contracts in most cases are treated as accident and health insurance contracts. Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from income as amounts received for personal injury or sickness. To claim an exclusion for payments made on a per diem or other periodic basis under a long-term care insurance contract, you must file Form 8853 with your return. A long-term care insurance contract is an insurance contract that only provides coverage for qualified long-term care services. The contract must:
Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they’re paid under a workers' compensation act or a statute in the nature of a workers' compensation act. The exemption also applies to your survivors. The exemption, however, doesn’t apply to retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired because of an occupational sickness or injury. .
In addition to disability pensions and annuities, you may receive other payments for sickness or injury.
Foreign-source income. If you are a U.S. citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Automatic 6-month extension. If you receive your Form 1099 reporting your interest income late and you need more time to file your tax return, you can request a 6-month extension of time to file. See Automatic Extension in chapter 1. Children who have unearned income. See Form 8615 and its instructions for the rules and rates that apply to certain children with unearned income.
This chapter discusses the following topics.
In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. Exceptions to this rule are discussed later in this chapter. You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. See Money borrowed to invest in certificate of deposit, later, and chapter 12. You may want to see:
Publication
Form (and Instructions)
For these and other useful items, go to IRS.gov/Forms.
Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. The following are some sources of taxable interest.
You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U.S. savings bonds during the year if you pay qualified higher educational expenses during the same year. This exclusion is known as the Education Savings Bond Program. You don't qualify for this exclusion if your filing status is married filing separately.
Amount excludable. If the total proceeds (interest and principal) from the qualified U.S. savings bonds you redeem during the year aren't more than your adjusted qualified higher education expenses for the year, you may be able to exclude all of the interest. If the proceeds are more than the expenses, you may be able to exclude only part of the interest. To determine the excludable amount, multiply the interest part of the proceeds by a fraction. The numerator of the fraction is the qualified higher education expenses you paid during the year. The denominator of the fraction is the total proceeds you received during the year.
Example. In February 2021, Mark and Joan, a married couple, cashed qualified Series EE U.S. savings bonds with a total denomination of $10,000 that they bought in April 2005 for $5,000. They received proceeds of $6,972, representing principal of $5,000 and interest of $1,972. In 2021, they paid $4,000 of their daughter's college tuition. They aren't claiming an education credit for that amount, and their daughter doesn't have any tax-free educational assistance. They can exclude $1,131 ($1,972 × ($4,000 ÷ $6,972)) of interest in 2021. They must include the remaining $841 ($1,972 − $1,131) interest in gross income. .
Treasury bills, notes, and bonds are direct debts (obligations) of the U.S. Government. . . Treasury Retail Securities Services P.O. Box 7015 Minneapolis, MN 55480-7015 .. For information on Series EE, Series I, and Series HH savings bonds, see U.S. Savings Bonds, earlier.
If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. You must report that part of the sales price as interest income for the year of sale. If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. When that interest is paid to you, treat it as a nontaxable return of your capital investment, rather than as interest income. See Accrued interest on bonds under How To Report Interest Income in chapter 1 of IRS.gov/Pub550 for information on reporting the payment.
Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. For more information about insurance proceeds received in installments, see Pub. 525, Taxable and Nontaxable Income.
Interest on a bond used to finance government operations generally isn't taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. However, the essential government function requirement does not apply to tribal economic development bonds issued after February 17, 2009. See section 7871(f). For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of IRS.gov/Pub550.
Original issue discount (OID) is a form of interest. You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. OID is the difference between the stated redemption price at maturity and the issue price. All debt instruments that pay no interest before maturity are presumed to be issued at a discount. Zero coupon bonds are one example of these instruments. The OID accrual rules generally don't apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). See Discount on Short-Term Obligations in chapter 1 of IRS.gov/Pub550.
Form 1099-OID. The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. It will also show, in box 2, the stated interest you must include in your income. Box 8 shows OID on a U.S. Treasury obligation for the part of the year you owned it and isn't included in box 1. A copy of Form 1099-OID will be sent to the IRS. Don't file your copy with your return. Keep it for your records. In most cases, you must report the entire amount in boxes 1, 2, and 8 of Form 1099-OID as interest income. But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information.
Refiguring OID shown on Form 1099-OID. You may need to refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following applies.
If you acquired your debt instrument before 2014, your payer is only required to report a gross amount of OID in box 1 or box 8 of Form 1099-OID. For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Pub. 1212 and the instructions for Form 1099-OID. If you acquired your debt instrument after 2013, unless you have informed your payer that you do not want to amortize bond premium, your payer must generally report either (1) a net amount of OID that reflects the offset of OID by the amount of bond premium or acquisition premium amortization for the year, or (2) a gross amount for both the OID and the bond premium or acquisition premium amortization for the year.
Generally, you report all your taxable interest income on Form 1040 or 1040-SR, line 2b. .
Reporting tax-exempt interest. Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including zero coupon municipal bonds) reported on Form 1099-INT, box 8, and exempt-interest dividends from a mutual fund or other regulated investment company reported on Form 1099-DIV, box 11. Add these amounts to any other tax-exempt interest you received. Report the total on line 2a of Form 1040 or 1040-SR. Form 1099-INT, box 9, and Form 1099-DIV, box 12, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 11. Don't add the amounts in Form 1099-INT, box 9, and Form 1099-DIV, box 12, to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 11. .
Form 1099-INT. Your taxable interest income, except for interest from U.S. savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. Add this amount to any other taxable interest income you received. See the instructions for Form 1099-INT if you have interest from a security acquired at a premium. You must report all of your taxable interest income even if you don't receive a Form 1099-INT. Contact your financial institution if you don't receive a Form 1099-INT by February 15. Your identifying number may be truncated on any Form 1099-INT you receive. If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. See Penalty on early withdrawal of savings in chapter 1 of IRS.gov/Pub550. Box 3 of Form 1099-INT shows the interest income you received from U.S. savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Generally, add the amount shown in box 3 to any other taxable interest income you received. If part of the amount shown in box 3 was previously included in your interest income, see U.S. savings bond interest previously reported, later. If you acquired the security at a premium, see the instructions for Form 1099-INT. Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. Include the amount from box 4 on Form 1040 or 1040-SR, line 25b (federal income tax withheld). Box 5 of Form 1099-INT shows investment expenses. See chapter 12 for more information about investment expenses. Box 6 of Form 1099-INT shows foreign tax paid. You may be able to claim this tax as a deduction or a credit on your Form 1040 or 1040-SR. See your tax return instructions. Box 7 of Form 1099-INT shows the country or U.S. possession to which the foreign tax was paid.
This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. It explains the following topics.
Social security benefits include monthly retirement, survivor, and disability benefits. They don’t include Supplemental Security Income (SSI) payments, which aren’t taxable. Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. If you received these benefits during 2021, you should have received a Form SSA-1099, Social Security Benefit Statement; or Form RRB-1099, Payments by the Railroad Retirement Board. These forms show the amounts received and repaid, and taxes withheld for the year. You may receive more than one of these forms for the same year. You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and repaid, and taxes withheld for that year. See the Appendix at the end of Pub. 915, Social Security and Equivalent Railroad Retirement Benefits, for more information.
When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits.
What isn’t covered in this chapter. This chapter doesn’t cover the tax rules for the following railroad retirement benefits.
This chapter doesn’t cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement; or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board. For information about these benefits, see Pub. 519, U.S. Tax Guide for Aliens; and Pub. 915, Social Security and Equivalent Railroad Retirement Benefits. This chapter also doesn’t cover the tax rules for foreign social security benefits. These benefits are taxable as annuities, unless they are exempt from U.S. tax or treated as a U.S. social security benefit under a tax treaty. You may want to see:
Publication
Forms (and Instructions)
For these and other useful items, go to IRS.gov/Forms.
To find out whether any of your benefits may be taxable, compare the base amount (explained later) for your filing status with the total of:
Figuring total income. To figure the total of one-half of your benefits plus your other income, use Worksheet 7-1, discussed later. If the total is more than your base amount, part of your benefits may be taxable. If you are married and file a joint return for 2021, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Even if your spouse didn’t receive any benefits, you must add your spouse's income to yours to figure whether any of your benefits are taxable. .
Example. You and your spouse (both over 65) are filing a joint return for 2021 and you both received social security benefits during the year. In January 2022, you received a Form SSA-1099 showing net benefits of $5,100 in box 5. Your spouse received a Form SSA-1099 showing net benefits of $2,500 in box 5. You also received a taxable pension of $27,200 and interest income of $700. You didn’t have any tax-exempt interest income. Your benefits aren’t taxable for 2021 because your income, as figured in Worksheet 7-1, isn’t more than your base amount ($32,000) for married filing jointly. Even though none of your benefits are taxable, you must file a return for 2021 because your taxable gross income ($27,900) exceeds the minimum filing requirement amount for your filing status.
If part of your benefits are taxable, you must use Form 1040 or 1040-SR.
If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Generally, the higher that total amount, the greater the taxable part of your benefits.
The following are a few examples you can use as a guide to figure the taxable part of your benefits.
Example 1. George White is single and files Form 1040 for 2021. He received the following income in 2021. George also received social security benefits during 2021. The Form SSA-1099 he received in January 2022 shows $5,980 in box 5. To figure his taxable benefits, George completes the worksheet shown here. .
Filled-in Worksheet 1. Figuring Your Taxable Benefits
The amount on line 19 of George's worksheet shows that $2,990 of his social security benefits is taxable. On line 6a of his Form 1040, George enters his net benefits of $5,980. On line 6b, he enters his taxable benefits of $2,990.
Example 2. Ray and Alice Hopkins file a joint return on Form 1040 for 2021. Ray is retired and received a fully taxable pension of $15,500. He also received social security benefits, and his Form SSA-1099 for 2021 shows net benefits of $5,600 in box 5. Alice worked during the year and had wages of $14,000. She made a deductible payment to her IRA account of $1,000 and isn’t covered by a retirement plan at work. Ray and Alice have two savings accounts with a total of $250 in taxable interest income. They complete Worksheet 1, shown below, entering $29,750 ($15,500 + $14,000 + $250) on line 3. They find none of Ray's social security benefits are taxable. On Form 1040, they enter $5,600 on line 6a and -0- on line 6b.
Filled-in Worksheet 1. Figuring Your Taxable Benefits
Example 3. Joe and Betty Johnson file a joint return on Form 1040 for 2021. Joe is a retired railroad worker and in 2021 received the SSEB portion of tier 1 railroad retirement benefits. Joe's Form RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and received a fully taxable pension of $38,000. They had $2,300 in taxable interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. They figure their taxable benefits by completing Worksheet 1, shown below. Because they have qualified U.S. savings bond interest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040) on line 3 of the worksheet instead of the amount from line 2b of their Form 1040. On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500).
Filled-in Worksheet 1. Figuring Your Taxable Benefits
More than 50% of Joe's net benefits are taxable because the income on line 8 of the worksheet ($45,500) is more than $44,000. (See Maximum taxable part under How Much Is Taxable, earlier.) Joe and Betty enter $10,000 on Form 1040, line 6a; and $6,275 on Form 1040, line 6b.
You may be entitled to deduct certain amounts related to the benefits you receive.
In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits you repaid (box 4) are more than the gross benefits (box 3) you received. If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Don’t use a worksheet in this case. If you receive more than one form, a negative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year. If you have any questions about this negative figure, contact your local SSA office or your local RRB field office.
Business meals. Section 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for the temporary allowance of a 100% business meal deduction for food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023.
Unemployment compensation. If you received unemployment compensation but did not receive Form 1099-G, Certain Government Payments, through the mail, you may need to access your information through your state’s website to get your electronic Form 1099-G.
You must include on your return all items of income you receive in the form of money, property, and services unless the tax law states that you don’t include them. Some items, however, are only partly excluded from income. This chapter discusses many kinds of income and explains whether they’re taxable or nontaxable.
This chapter begins with discussions of the following income items.
Publication
For these and other useful items, go to IRS.gov/Forms.
Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. Generally, you report this income on Schedule C (Form 1040), Profit or Loss From Business. However, if the barter involves an exchange of something other than services, such as in Example 3 below, you may have to use another form or schedule instead.
Example 1. You’re a self-employed attorney who performs legal services for a client, a small corporation. The corporation gives you shares of its stock as payment for your services. You must include the fair market value of the shares in your income on Schedule C (Form 1040) in the year you receive them.
Example 2. You’re self-employed and a member of a barter club. The club uses “credit units” as a means of exchange. It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. The club subtracts credit units from your account when you receive goods or services from other members. You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year.
Example 3. You own a small apartment building. In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. You must report as rental income on Schedule E (Form 1040), Supplemental Income and Loss, the fair market value of the artwork, and the artist must report as income on Schedule C (Form 1040) the fair rental value of the apartment.
In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. You have no income from the canceled debt if it’s intended as a gift to you. A debt includes any indebtedness for which you’re liable or which attaches to property you hold. If the debt is a nonbusiness debt, report the canceled amount on Schedule 1 (Form 1040), line 8c. If it’s a business debt, report the amount on Schedule C (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you’re a farmer).
Mortgage relief upon sale or other disposition. If you’re personally liable for a mortgage (recourse debt), and you’re relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Also, to the extent the mortgage discharge exceeds the fair market value of the property, it’s income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt, later. Report any income from discharge of indebtedness on nonbusiness debt that doesn’t qualify for exclusion as other income on Schedule 1 (Form 1040), line 8c. If you aren’t personally liable for a mortgage (nonrecourse debt), and you’re relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is included in the amount you realize. You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Report any gain on nonbusiness property as a capital gain. See Pub. 4681 for more information.
If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. You must report this item as income at its fair market value. Your out-of-pocket party expenses are subject to the 50% limit for meal expenses. For tax years 2018 and after, no deduction is allowed for any expenses related to activities generally considered entertainment, amusement, or recreation. Taxpayers may continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact. Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event. Section 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for the temporary allowance of a 100% business meal deduction for food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023. For more information about the limit for meal expenses, see Pub. 463, Travel, Gift, and Car Expenses.
Life insurance proceeds paid to you because of the death of the insured person aren’t taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract. However, interest income received as a result of life insurance proceeds may be taxable.
An endowment contract is a policy under which you’re paid a specified amount of money on a certain date unless you die before that date, in which case the money is paid to your designated beneficiary. Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Include in your income the part of the lump-sum payment that’s more than your cost.
A spouse, former spouse, and child of a public safety officer killed in the line of duty can exclude from gross income survivor benefits received from a governmental section 401(a) plan attributable to the officer’s service. See section 101(h). A public safety officer who’s permanently and totally disabled or killed in the line of duty and a surviving spouse or child can exclude from income death or disability benefits received from the federal Bureau of Justice Assistance or death benefits paid by a state program. See section 104(a)(6). For this purpose, the term “public safety officer” includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. For more information, see Pub. 559, Survivors, Executors, and Administrators.
A partnership generally isn’t a taxable entity. The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items. . For more information on partnerships, see Pub. 541, Partnerships.
In most cases, an S corporation doesn’t pay tax on its income. Instead, the income, losses, deductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share. . For more information on S corporations and their shareholders, see the Instructions for Form 1120-S.
A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). You may also have recoveries of nonitemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.
If you rent out personal property, such as equipment or vehicles, how you report your income and expenses is in most cases determined by:
If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Generally, you can claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction. .
Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C (Form 1040).
Sale of property interest. If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or business under section 1231, not royalty income. Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). For more information on selling section 1231 property, see chapter 3 of Pub. 544. If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance.
Don’t include in your income governmental benefit payments from a public welfare fund based upon need, such as payments to blind individuals under a state public assistance law. Payments from a state fund for the victims of crime shouldn’t be included in the victims' incomes if they’re in the nature of welfare payments. Don’t deduct medical expenses that are reimbursed by such a fund. You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently.
Social security benefits (including lump-sum payments attributable to prior years), Supplemental Security Income (SSI) benefits, and lump-sum death benefits. The Social Security Administration (SSA) provides benefits such as old-age benefits, benefits to disabled workers, and benefits to spouses and dependents. These benefits may be subject to federal income tax depending on your filing status and other income. See chapter 7 in this publication and Pub. 915, Social Security and Equivalent Railroad Retirement Benefits, for more information. An individual originally denied benefits, but later approved, may receive a lump-sum payment for the period when benefits were denied (which may be prior years). See Pub. 915 for information on how to make a lump-sum election, which may reduce your tax liability. There are also other types of benefits paid by the SSA. However, SSI benefits and lump-sum death benefits (one-time payment to spouse and children of deceased) aren’t subject to federal income tax. For more information on these benefits, go to SSA.gov.
Modified AGI limit for traditional IRA contributions. For 2021, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work but you aren’t, your deduction is phased out if your modified AGI is more than $198,000 but less than $208,000. If your modified AGI is $208,000 or more, you can’t take a deduction for contributions to a traditional IRA. See How Much Can You Deduct, later. Modified AGI limit for Roth IRA contributions. For 2021, your Roth IRA contribution limit is reduced (phased out) in the following situations.
See Can You Contribute to a Roth IRA, later. 2022 modified AGI limits. You can find information about the 2022 contribution and AGI limits in Pub. 590-A.
Qualified disaster tax relief. Special rules provide for tax-favored withdrawals and repayments from certain retirement plans for taxpayers who suffered an economic loss as a result of a qualified disaster. A qualified disaster includes a major disaster that was declared by Presidential Declaration that is dated between January 1, 2020, and February 25, 2021 (inclusive). However, in order to qualify under the latest legislation, the major disaster must have an incident period beginning between December 28, 2019, and December 27, 2020 (inclusive). Also, a qualified disaster loss does not include any disaster that has been declared only by reason of COVID-19. See Form 8915-F, Qualified Disaster Plan Distributions and Repayments, for more information.See Pub. 590-B, Distributions from Individual Retirement Arrangements (IRAs), for more information. Maximum age for making traditional IRA contributions repealed. For tax years beginning after 2019, there is no age limit on making contributions to your traditional IRA. For more information, see Pub. 590-A. Required minimum distributions (RMDs). For distributions required to be made after tax year 2019, the age for the required beginning date for mandatory distributions is changed to age 72 for taxpayers reaching age 70½ after 2019. Contributions to both traditional and Roth IRAs. For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs, later. Extended rollover period for qualified plan loan offsets in 2018 or later. For distributions made in tax years after tax year 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to rollover a qualified plan loan offset amount. For more information, see Pub. 590-A. No recharacterizations of conversions made in 2018 or later. A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after tax year 2017, can’t be recharacterized as having been made to a traditional IRA. For more information, see Pub. 590-A. Statement of required minimum distribution. If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to figure it for you. The report or offer must include the date by which the amount must be distributed. The report is due January 31 of the year in which the minimum distribution is required. It can be provided with the year-end fair market value statement that you normally get each year. No report is required for IRAs of owners who have died. IRA interest. Although interest earned from your IRA is generally not taxed in the year earned, it isn't tax-exempt interest. Tax on your traditional IRA is generally deferred until you take a distribution. Don't report this interest on your tax return as tax-exempt interest. Net investment income tax. For purposes of the Net Investment Income Tax (NIIT), net investment income doesn't include distributions from a qualified retirement plan including IRAs (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). However, these distributions are taken into account when determining the modified AGI threshold. Distributions from a nonqualified retirement plan are included in net investment income. See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Form 8606. To designate contributions as nondeductible, you must file Form 8606. .
An IRA is a personal savings plan that gives you tax advantages for setting aside money for your retirement. This chapter discusses the following topics.
Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees (SIMPLE) plans aren't discussed in this chapter. For more information on these plans and employees' SEP IRAs and SIMPLE IRAs that are part of these plans, see Pub. 560, Retirement Plans for Small Business. For information about contributions, deductions, withdrawals, transfers, rollovers, and other transactions, see Pub. 590-A and Pub. 590-B. You may want to see:
Publication
Form (and Instructions)
For these and other useful items, go to IRS.gov/Forms.
In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA.” A traditional IRA is any IRA that isn't a Roth IRA or a SIMPLE IRA.Two advantages of a traditional IRA are:
You can open and make contributions to a traditional IRA if you (or, if you file a joint return, your spouse) received taxable compensation during the year. .
What is compensation? Generally, compensation is what you earn from working. Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that this amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2. Compensation also includes commissions and taxable alimony and separate maintenance payments.
You can open a traditional IRA at any time. However, the time for making contributions for any year is limited. See When Can Contributions Be Made, later. You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code requirements.
As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Contributions must be in the form of money (cash, check, or money order). Property can't be contributed.
Generally, you can deduct the lesser of:
.
The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. The “Retirement plan” box should be checked if you were covered. Reservists and volunteer firefighters should also see Situations in Which You Aren’t Covered, later. If you aren't certain whether you were covered by your employer's retirement plan, you should ask your employer.
Special rules apply to determine the tax years for which you are covered by an employer plan. These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan.
If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status. To determine if your deduction is subject to phaseout, you must determine your modified AGI and your filing status. See Filing status and Modified adjusted gross income (AGI), later. Then use Table 9-1 or Table 9-2 to determine if the phaseout applies. When filing Form 1040 or 1040-SR, refigure the AGI amount on line 11 without taking into account any of the following amounts.
When filing Form 1040 or 1040-SR, enter your IRA deduction on Schedule 1 (Form 1040), line 20.
Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution.
Example. Mike is 30 years old and single. In 2021, he was covered by a retirement plan at work. His salary was $67,000. His modified AGI was $80,000. Mike made a $6,000 IRA contribution for 2021. Because he was covered by a retirement plan and his modified AGI was over $76,000, he can't deduct his $6,000 IRA contribution. He must designate this contribution as a nondeductible contribution by reporting it on Form 8606, as explained next. .
If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. For more information, see the discussion of Inherited IRAs under Rollover From One IRA Into Another, later.
You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. You can make the following kinds of transfers.
A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, isn't a rollover. This includes the situation where the current trustee issues a check to the new trustee, but gives it to you to deposit. Because there is no distribution to you, the transfer is tax free. Because it isn't a rollover, it isn't affected by the 1-year waiting period required between rollovers, discussed later under Rollover From One IRA Into Another. For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Pub. 590-A.
Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another retirement plan. The contribution to the second retirement plan is called a “rollover contribution.”
An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Pub. 590-A.
You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Because this is a rollover, you can't deduct the amount that you reinvest in an IRA.
Example. John has three traditional IRAs: IRA-1, IRA-2, and IRA-3. John didn't take any distributions from his IRAs in 2021. On January 1, 2022, John took a distribution from IRA-1 and rolled it over into IRA-2 on the same day. For 2022, John can't roll over any other 2021 IRA distribution, including a rollover distribution involving IRA-3. This wouldn’t apply to a trustee-to-trustee transfer or a Roth IRA conversion.
Reporting rollovers from IRAs. Report any rollover from one traditional IRA to the same or another traditional IRA on Form 1040 or 1040-SR as follows. Enter the total amount of the distribution on Form 1040 or 1040-SR, line 4a. If the total amount on Form 1040 or 1040-SR, line 4a, was rolled over, enter zero on Form 1040 or 1040-SR, line 4b. If the total distribution wasn't rolled over, enter the taxable portion of the part that wasn't rolled over on Form 1040 or 1040-SR, line 4b. Enter “Rollover” next to Form 1040 or 1040-SR, line 4b. For more information, see the Instructions for Form 1040. If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2022, attach a statement explaining what you did.
You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's):
A qualified plan is one that meets the requirements of the Internal Revenue Code. .
If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free. For detailed information, see Distributions under divorce or similar proceedings (alternate payees) under Rollover From Employer's Plan Into an IRA in Pub. 590-A.
You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution. See Can You Move Retirement Plan Assets? in chapter 1 of Pub. 590-A for more detailed information.
There are rules limiting use of your IRA assets and distributions from it. Violation of the rules generally results in additional taxes in the year of violation. See What Acts Result in Penalties or Additional Taxes, later. .
The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you don't follow the rules. There are additions to the regular tax for using your IRA funds in prohibited transactions. There are also additional taxes for the following activities.
There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required.
Generally, a prohibited transaction is any improper use of your traditional IRA by you, your beneficiary, or any disqualified person. Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent). The following are examples of prohibited transactions with a traditional IRA.
If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. You may have to pay the 10% additional tax on early distributions, discussed later.
Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of:
An excess contribution could be the result of your contribution, your spouse's contribution, your employer's contribution, or an improper rollover contribution. If your employer makes contributions on your behalf to a SEP IRA, see chapter 2 of Pub. 560.
You can't keep amounts in your traditional IRA indefinitely. Generally, you must begin receiving distributions by April 1 of the year following the year in which you reach age 72. The required minimum distribution for any year after the year in which you reach age 72 must be made by December 31 of that later year.
Generally, you must use Form 5329 to report the tax on excess contributions, early distributions, and excess accumulations.
Regardless of your age, you may be able to establish and make nondeductible contributions to a retirement plan called a Roth IRA.
A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined earlier). It can be either an account or an annuity. Individual retirement accounts and annuities are described under How Can a Traditional IRA Be Opened? in chapter 1 of Pub. 590-A. To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA. Unlike a traditional IRA, you can't deduct contributions to a Roth IRA. But, if you satisfy the requirements, qualified distributions (discussed later) are tax free. You can leave amounts in your Roth IRA as long as you live.
You can open a Roth IRA at any time. However, the time for making contributions for any year is limited. See When Can You Make Contributions under Can You Contribute to a Roth IRA? next.
Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:
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You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions). .
You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. You may be able to roll amounts over from a qualified retirement plan to a Roth IRA. You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA.
You can withdraw, tax free, all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Most of the rules for rollovers, explained earlier under Rollover From One IRA Into Another under Traditional IRAs, apply to these rollovers.
After you have figured your adjusted gross income, you are ready to subtract the deductions used to figure taxable income. You can subtract either the standard deduction or itemized deductions, and, if you qualify, the qualified business income deduction. Itemized deductions are deductions for certain expenses that are listed on Schedule A (Form 1040). The three chapters in this part discuss the standard deduction and each itemized deduction. See chapter 10 for the factors to consider when deciding whether to take the standard deduction or itemized deductions. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:
Standard deduction increased. The standard deduction for taxpayers who don't itemize their deductions on Schedule A (Form 1040) has increased. The amount of your standard deduction depends on your filing status and other factors. Use the 2021 Standard Deduction Tables near the end of this chapter to figure your standard deduction. .
This chapter discusses the following topics.
Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. If you have a choice, you can use the method that gives you the lower tax. The standard deduction is a dollar amount that reduces your taxable income. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A (Form 1040). The standard deduction is higher for taxpayers who:
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The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether another taxpayer can claim you as a dependent. Generally, the standard deduction amounts are adjusted each year for inflation. The standard deduction amounts for most people are shown in Table 10-1.
If you are age 65 or older on the last day of the year and don't itemize deductions, you are entitled to a higher standard deduction. You are considered 65 on the day before your 65th birthday. Therefore, you can take a higher standard deduction for 2021 if you were born before January 2, 1957. Use Table 10-2 to figure the standard deduction amount.
If you are blind on the last day of the year and you don't itemize deductions, you are entitled to a higher standard deduction.
You can take the higher standard deduction if your spouse is age 65 or older or blind and:
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Your standard deduction may be increased by any net qualified disaster loss. See the Instructions for Form 1040 and the Instructions for Schedule A (Form 1040) for more information on how to figure your increased standard deduction and how to report it on Form 1040 or 1040-SR.
The following examples illustrate how to determine your standard deduction using Tables 10-1 and 10-2.
Example 1. Larry, 46, and Donna, 33, are filing a joint return for 2021. Neither is blind, and neither can be claimed as a dependent. They decide not to itemize their deductions. They use Table 10-1. Their standard deduction is $25,100.
Example 2. The facts are the same as in Example 1, except that Larry is blind at the end of 2021. Larry and Donna use Table 10-2. Their standard deduction is $26,450.
Example 3. Bill and Lisa are filing a joint return for 2021. Both are over age 65. Neither is blind, and neither can be claimed as a dependent. If they don't itemize deductions, they use Table 10-2. Their standard deduction is $27,800.
The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of:
However, if the individual is 65 or older or blind, the standard deduction may be higher. If you (or your spouse, if filing jointly) can be claimed as a dependent on someone else's return, use Table 10-3 to determine your standard deduction.
Earned income defined. Earned income is salaries, wages, tips, professional fees, and other amounts received as pay for work you actually perform. For purposes of the standard deduction, earned income also includes any part of a taxable scholarship or fellowship grant. See chapter 1 of Pub. 970, Tax Benefits for Education, for more information on what qualifies as a scholarship or fellowship grant.
Example 1. Michael is 16 years old and single. His parents can claim him as a dependent on their 2021 tax return. He has interest income of $780 and wages of $150. He has no itemized deductions. Michael uses Table 10-3 to find his standard deduction. He enters $150 (his earned income) on line 1, $500 ($150 + $350) on line 3, $1,100 (the larger of $500 and $1,100) on line 5, and $12,550 on line 6. His standard deduction, on line 7a, is $1,100 (the smaller of $1,100 and $12,550).
Example 2. Joe, a 22-year-old college student, can be claimed as a dependent on his parents' 2021 tax return. Joe is married and files a separate return. His wife doesn't itemize deductions on her separate return. Joe has $1,500 in interest income and wages of $3,800. He has no itemized deductions. Joe finds his standard deduction by using Table 10-3. He enters his earned income, $3,800, on line 1. He adds lines 1 and 2 and enters $4,150 ($3,800 + $350) on line 3. On line 5, he enters $4,150, the larger of lines 3 and 4. Because Joe is married filing a separate return, he enters $12,550 on line 6. On line 7a, he enters $4,150 as his standard deduction because it is smaller than $12,550, the amount on line 6.
Example 3. Amy, who is single, can be claimed as a dependent on her parents' 2021 tax return. She is 18 years old and blind. She has interest income of $1,300 and wages of $2,900. She has no itemized deductions. Amy uses Table 10-3 to find her standard deduction. She enters her wages of $2,900 on line 1. She adds lines 1 and 2 and enters $3,250 ($2,900 + $350) on line 3. On line 5, she enters $3,250, the larger of lines 3 and 4. Because she is single, Amy enters $12,550 on line 6. She enters $3,250 on line 7a. This is the smaller of the amounts on lines 5 and 6. Because she checked the box in the top part of the worksheet, indicating she is blind, she enters $1,700 on line 7b. She then adds the amounts on lines 7a and 7b and enters her standard deduction of $4,950 ($3,250 + $1,700) on line 7c.
Example 4. Ed is 18 years old and single. His parents can claim him as a dependent on their 2021 tax return. He has wages of $7,000, interest income of $500, and a business loss of $3,000. He has no itemized deductions. Ed uses Table 10-3 to figure his standard deduction. He enters $4,000 ($7,000 − $3,000) on line 1. He adds lines 1 and 2 and enters $4,350 ($4,000 + $350) on line 3. On line 5, he enters $4,350, the larger of lines 3 and 4. Because he is single, Ed enters $12,550 on line 6. On line 7a, he enters $4,350 as his standard deduction because it is smaller than $12,550, the amount on line 6.
You should itemize deductions if your total deductions are more than your standard deduction amount. Also, you should itemize if you don't qualify for the standard deduction, as discussed earlier under Persons not eligible for the standard deduction. You should first figure your itemized deductions and compare that amount to your standard deduction to make sure you are using the method that gives you the greater benefit.
Table 10-1.Standard Deduction Chart for Most People*
Table 10-2.Standard Deduction Chart for People Born Before January 2, 1957, or Who Are Blind*
Table 10-3.Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent.
Limitation on deduction for state and local taxes. The Tax Cuts and Jobs Act provided for a temporary limitation on the deduction for state and local taxes. See Limitation on deduction for state and local taxes, later. No deduction for foreign taxes paid for real estate. You can no longer deduct foreign taxes you paid on real estate. You may want to see:
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The following two tests must be met for you to deduct any tax.
This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes.
You can deduct state and local income taxes.
Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows.
Refund (or credit) of state or local income taxes. If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Schedule 1 (Form 1040), line 1, in the year you receive it. This includes refunds resulting from taxes that were overwithheld, applied from a prior-year return, not figured correctly, or figured again because of an amended return. If you didn’t itemize your deductions in the previous year, don’t include the refund in income. If you deducted the taxes in the previous year, include all or part of the refund on Schedule 1 (Form 1040), line 1, in the year you receive the refund. For a discussion of how much to include, see Recoveries in Pub. 525, Taxable and Nontaxable Income, for more information.
Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U.S. possession. However, you can’t take a deduction or credit for foreign income taxes paid on income that is exempt from U.S. tax under the foreign earned income exclusion or the foreign housing exclusion. For information on these exclusions, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. For information on the foreign tax credit, see Pub. 514.
You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5a. You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction.
Optional sales tax tables. Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). You may also be able to add the state and local general sales taxes paid on certain specified items. Your applicable table amount is based on the state where you live, your income, and your family size. Your income is your adjusted gross income plus any nontaxable items such as the following.
If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. See the instructions for Schedule A (Form 1040), line 5a, for details.
Deductible real estate taxes are any state and local taxes on real property levied for the general public welfare. You can deduct these taxes only if they are assessed uniformly against all property under the jurisdiction of the taxing authority. The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or service rendered to you. Deductible real estate taxes generally don’t include taxes charged for local benefits and improvements that increase the value of the property. They also don’t include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. For more information about taxes and charges that aren’t deductible, see Real Estate-Related Items You Can’t Deduct, later.
Division of real estate taxes between buyers and sellers. If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. The seller is treated as paying the taxes up to, but not including, the date of sale. The buyer is treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is included on the settlement statement provided at the closing. If you (the seller) can’t deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. This lets you deduct the part of the tax to the date of sale even though you didn’t actually pay it. However, you must also include the amount of that tax in the selling price of the property. The buyer must include the same amount in his or her cost of the property. You figure your deduction for taxes on each property bought or sold during the real property tax year as follows.
Examples. The following examples illustrate how real estate taxes are divided between buyer and seller.
Example 1. Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. The tax on their old home, sold on May 7, was $620. The tax on their new home, bought on May 3, was $732. Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they didn’t actually pay them to the taxing authority. On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). They figure their deduction for taxes on their old home as follows.
Worksheet 11-1. Figuring Your State and Local Real Estate Tax Deduction — Taxes on Old Home
Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. (The buyers add the $214 to their cost of the home.) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). They figure their deduction for taxes on their new home as follows.
Worksheet 11-1. Figuring Your State and Local Real Estate Tax Deduction — Taxes on New Home
Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax.) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. They will enter this amount on Schedule A (Form 1040), line 5b.
Example 2. George and Helen Brown bought a new home on May 3, 2021. Their real property tax year for the new home is the calendar year. Real estate taxes for 2020 were assessed in their state on January 1, 2021. The taxes became due on May 31, 2021, and October 31, 2021. The Browns agreed to pay all taxes due after the date of purchase. Real estate taxes for 2020 were $680. They paid $340 on May 31, 2021, and $340 on October 31, 2021. These taxes were for the 2020 real property tax year. The Browns can’t deduct them since they didn’t own the property until 2021. Instead, they must add $680 to the cost of their new home. In January 2022, the Browns receive their 2021 property tax statement for $752, which they will pay in 2022. The Browns owned their new home during the 2021 real property tax year for 243 days (May 3 to December 31). They will figure their 2022 deduction for taxes as follows.
Worksheet 11-1. Figuring Your State and Local Real Estate Tax Deduction — Taxes on New Home
The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2022, along with the $680 paid in 2021, is added to the cost of their new home. Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2021 tax deduction of $931. This is the sum of the $680 for 2020 and the $251 for the 122 days the seller owned the home in 2021. The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. The seller should contact the Browns in January 2022 to find out how much real estate tax is due for 2021.
Form 1099-S. For certain sales or exchanges of real estate, the person responsible for closing the sale (generally, the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 6. The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. See Refund (or rebate), later.
Payments for the following items generally aren’t deductible as real estate taxes.
Taxes for local benefits. Deductible real estate taxes generally don’t include taxes charged for local benefits and improvements tending to increase the value of your property. These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. You should increase the basis of your property by the amount of the assessment. Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. If you can’t determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. .
Personal property tax is deductible if it is a state or local tax that is:
A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. If the tax is partly based on value and partly based on other criteria, it may qualify in part.
Example. Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. You paid $32 based on the value ($1,500) and weight (3,400 lbs.) of your car. You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. The remaining $17 ($0.50 × 34), based on the weight, isn’t deductible.
Many federal, state, and local government taxes aren’t deductible because they don’t fall within the categories discussed earlier. Other taxes and fees, such as federal income taxes, aren’t deductible because the tax law specifically prohibits a deduction for them. See Table 11-1. Taxes and fees that are generally not deductible include the following items.
Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income-producing activity. For other nondeductible items, see Real Estate-Related Items You Can’t Deduct, earlier.
Standard mileage rate. The 2021 rate for business use of a vehicle is 56 cents a mile.
Educator expenses. Educator expenses include amounts paid or incurred after March 12, 2020, for personal protective equipment, disinfectant, and other supplies used for the prevention of the spread of coronavirus. For more information, see the instructions for Schedule 1 (Form 1040), line 11, and Educator Expenses in Pub. 529, Miscellaneous Deductions. No miscellaneous itemized deductions allowed. You can no longer claim any miscellaneous itemized deductions. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-adjusted-gross-income (AGI) limitation. See Miscellaneous Itemized Deductions, later. Fines and penalties. Rules regarding deducting fines and penalties have changed. See Fines and Penalties, later.
This chapter explains that you can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified categories of employment claiming a deduction relating to unreimbursed employee expenses. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-AGI limitation. You can still claim certain expenses as itemized deductions on Schedule A (Form 1040), Schedule A (Form 1040-NR), or as an adjustment to income on Form 1040 or 1040-SR. This chapter covers the following topics.
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You can no longer claim any miscellaneous itemized deductions that are subject to the 2%-of-AGI limitation, including unreimbursed employee expenses. However, you may be able to deduct certain unreimbursed employee business expenses if you fall into one of the following categories of employment listed under Unreimbursed Employee Expenses next.
You can no longer claim a deduction for unreimbursed employee expenses unless you fall into one of the following categories of employment.
You can deduct unreimbursed employee expenses only if you qualify as an Armed Forces reservist, a qualified performing artist, a fee-basis state or local government official, or an employee with impairment-related work expenses. Unreimbursed employee expenses for individuals in these categories of employment are deducted as adjustments to gross income. Qualified employees listed in one of the categories above must complete Form 2106, Employee Business Expenses, to take the deduction. You can deduct only unreimbursed employee expenses that are paid or incurred during your tax year, for carrying on your trade or business of being an employee, and ordinary and necessary. An expense is ordinary if it's common and accepted in your trade, business, or profession. An expense is necessary if it's appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary.
If you were an eligible educator in 2021, you can deduct up to $250 of qualified expenses you paid in 2021 as an adjustment to gross income on Schedule 1 (Form 1040), line 11, rather than as a miscellaneous itemized deduction. If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses. For additional information, see Educator Expenses in Pub. 529, Miscellaneous Deductions. .
Because of the suspension of miscellaneous itemized deductions, there are two categories of expenses you can't deduct: miscellaneous itemized deductions subject to the 2%-of-AGI limitation, and those expenses that are traditionally nondeductible under the Internal Revenue Code. Both categories of deduction are discussed next.
Unless you fall into one of the qualified categories of employment under Unreimbursed Employee Expenses, earlier, miscellaneous itemized deductions that are subject to the 2%-of-AGI limitation can no longer be claimed. For expenses not related to unreimbursed employee expenses, you generally can't deduct the following expenses, even if you fall into one of the qualified categories of employment listed earlier.
Appraisal fees you pay to figure a casualty loss or the fair market value of donated property are miscellaneous itemized deductions and can no longer be deducted.
Damaged or stolen property used in performing services as an employee is a miscellaneous deduction and can no longer be deducted. For other casualty and theft losses, see Pub. 547, Casualties, Disasters, and Thefts.
Office expenses, such as rent and clerical help, you pay in connection with your investments and collecting taxable income on those investments are miscellaneous itemized deductions and are no longer deductible.
The convenience fee charged by the card processor for paying your income tax (including estimated tax payments) by credit or debit card is a miscellaneous itemized deduction and is no longer deductible.
If you use your home computer to produce income (for example, to manage your investments that produce taxable income), the depreciation of the computer for that part of the usage of the computer is a miscellaneous itemized deduction and is no longer deductible.
Fees you pay to a broker, bank, trustee, or similar agent to collect your taxable bond interest or dividends on shares of stock are miscellaneous itemized deductions and can no longer be deducted.
A hobby isn't a business because it isn't carried on to make a profit. Hobby expenses are miscellaneous itemized deductions and can no longer be deducted. See Not-for-Profit Activities in chapter 1 of Pub. 535, Business Expenses.
Pass-through entities include partnerships, S corporations, and mutual funds that aren't publicly offered. Deductions of pass-through entities are passed through to the partners or shareholders. The partner’s or shareholder’s share of passed-through deductions for investment expenses are miscellaneous itemized deductions and can no longer be deducted.
Investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income are miscellaneous itemized deductions and are no longer deductible.
You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. Legal expenses that you incur in attempting to produce or collect taxable income, or that you pay in connection with the determination, collection, or refund of any tax are miscellaneous itemized deductions and are no longer deductible. You can deduct expenses of resolving tax issues relating to profit or loss from business reported on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), from rentals or royalties reported on Schedule E (Form 1040), Supplemental Income and Loss, or from farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming, on that schedule. Expenses for resolving nonbusiness tax issues are miscellaneous itemized deductions and are no longer deductible.
For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in Pub. 547.
Generally, repayments of amounts that you included in income in an earlier year is a miscellaneous itemized deduction and can no longer be deducted. If you had to repay more than $3,000 that you included in your income in an earlier year, you may be able to deduct the amount. See Repayments Under Claim of Right, later.
Rent you pay for a safe deposit box you use to store taxable income-producing stocks, bonds, or investment-related papers is a miscellaneous itemized deduction and can no longer be deducted. You also can't deduct the rent if you use the box for jewelry, other personal items, or tax-exempt securities.
Service charges you pay as a subscriber in a dividend reinvestment plan are a miscellaneous itemized deduction and can no longer be deducted. These service charges include payments for:
Tax preparation fees on the return for the year in which you pay them are a miscellaneous itemized deduction and can no longer be deducted. These fees include the cost of tax preparation software programs and tax publications. They also include any fee you paid for electronic filing of your return.
Trustee's administrative fees that are billed separately and paid by you in connection with your IRA are a miscellaneous itemized deduction and can no longer be deducted. For more information about IRAs, see chapter 9.
In addition to the miscellaneous itemized deductions discussed earlier, you can't deduct the following expenses.
You can't deduct the expenses of adopting a child, but you may be able to take a credit for those expenses. See the Instructions for Form 8839, Qualified Adoption Expenses, for more information.
You can't deduct campaign expenses of a candidate for any office, even if the candidate is running for reelection to the office. These include qualification and registration fees for primary elections.
If you have a personal checking account, you can't deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest.
Generally, you can't deduct the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. This includes business, social, athletic, luncheon, sporting, airline, hotel, golf, and country clubs. You can't deduct dues paid to an organization if one of its main purposes is to:
Dues paid to airline, hotel, and luncheon clubs aren't deductible.
You can't deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). If you haul tools, instruments, or other items in your car to and from work, you can deduct only the additional cost of hauling the items such as the rent on a trailer to carry the items.
Generally, no deduction is allowed for fines and penalties paid to a government or specified nongovernmental entity for the violation of any law except in the following situations.
Nondeductible amounts include an amount paid in settlement of your actual or potential liability for a fine or penalty (civil or criminal). Fines or penalties include amounts paid such as parking tickets, tax penalties, and penalties deducted from teachers' paychecks after an illegal strike. No deduction is allowed for the restitution amount or amount paid to come into compliance with the law unless the amounts are specifically identified in the settlement agreement or court order. Also, any amount paid or incurred as reimbursement to the government for the costs of any investigation or litigation are not eligible for the exceptions and are nondeductible.
You can't deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer.
You can't deduct the cost of a home security system as a miscellaneous deduction. However, you may be able to claim a deduction for a home security system as a business expense if you have a home office. See Security system under Figuring the Deduction in Pub. 587.
You can't deduct any expenses for attending a convention, seminar, or similar meeting for investment purposes.
You can't deduct premiums you pay on your life insurance. You may be able to deduct, as alimony, premiums you pay on life insurance policies assigned to your former spouse. See Pub. 504, Divorced or Separated Individuals, for information on alimony.
You generally can't deduct amounts paid or incurred for lobbying expenses. These include expenses to:
You can't deduct a loss based on the mere disappearance of money or property. However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. See Pub. 547 for more information.
You can't deduct the expenses of lunches with co-workers, except while traveling away from home on business. See Pub. 463 for information on deductible expenses while traveling away from home.
You can't deduct the cost of meals while working late. However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you're traveling away from home. See Pub. 463 for information on deductible entertainment expenses and expenses while traveling away from home.
You can't deduct personal legal expenses such as those for the following.
You can't deduct these expenses even if a result of the legal proceeding is the loss of income-producing property.
You can't deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate aren't deductible.
You can't deduct professional accreditation fees such as the following.
You can't deduct expenses of radio and TV appearances to increase your personal prestige or establish your professional reputation.
You can't deduct contributions paid to a private plan that pays benefits to any covered employee who can't work because of any injury or illness not related to the job.
You can't deduct any charge (including taxes) for basic local telephone service for the first telephone line to your residence, even if it's used in a trade or business.
You can't deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you own stock but have no other interest. You can't deduct these expenses even if you're attending the meeting to get information that would be useful in making further investments.
You can't deduct expenses to produce tax-exempt income. You can't deduct interest on a debt incurred or continued to buy or carry If you have expenses to produce both taxable and tax-exempt income, but you can't identify the expenses that produce each type of income, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct.
You generally can't deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your employee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expenses would otherwise be deductible by the spouse, dependent, or other individual. See Pub. 463 for more information on deductible travel expenses.
You can't deduct voluntary unemployment benefit fund contributions you make to a union fund or a private fund. However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from unemployment caused by business conditions.
You can't deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties.
You can deduct the items listed below as itemized deductions. Report these items on Schedule A (Form 1040), line 16, or Schedule A (Form 1040-NR), line 7.
Each of the following items is discussed in detail after the list (except where indicated).
In general, if the amount you pay for a bond is greater than its stated principal amount, the excess is bond premium. You can elect to amortize the premium on taxable bonds. The amortization of the premium is generally an offset to interest income on the bond rather than a separate deduction item. Part of the premium on some bonds may be an itemized deduction on Schedule A (Form 1040). For more information, see Amortizable Premium on Taxable Bonds in Pub. 529, and Bond Premium Amortization in chapter 3 of Pub. 550, Investment Income and Expenses.
You can deduct a casualty or theft loss as an itemized deduction on Schedule A (Form 1040), line 16, if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). First, report the loss in Form 4684, Section B. You may also have to include the loss on Form 4797 if you're otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. For more information on casualty and theft losses, see Pub. 547.
Generally, if an estate or trust has an excess deduction resulting from total deductions being greater than its gross income, in the estate’s or trust's last tax year, a beneficiary can deduct the excess deductions, depending on its character. The excess deductions retain their character as an adjustment to arrive at adjusted gross income on Schedule 1 (Form 1040), as a non-miscellaneous itemized deduction reported on Schedule A (Form 1040), or as a miscellaneous itemized deduction. For more information on excess deductions of an estate or trust, see the Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040.
You can deduct the federal estate tax attributable to income in respect of a decedent that you as a beneficiary include in your gross income. Income in respect of the decedent is gross income that the decedent would have received had death not occurred and that wasn't properly includible in the decedent's final income tax return. See Pub. 559, Survivors, Executors, and Administrators, for more information.
You must report the full amount of your gambling winnings for the year on Schedule 1 (Form 1040), line 8b. You deduct your gambling losses for the year on Schedule A (Form 1040), line 16. You can't deduct gambling losses that are more than your winnings. . . Your diary should contain at least the following information.
See Pub. 529 for more information.
If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and for other expenses in connection with your place of work that are necessary for you to be able to work.
If you had to repay more than $3,000 that you included in your income in an earlier year because at the time you thought you had an unrestricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. See Repayments in chapter 8 for more information.
You may be able to deduct, as an adjustment to income on Schedule 1 (Form 1040), line 24h, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U.S. Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. However, the amount you can deduct on Schedule 1 (Form 1040), line 24h, is limited to the amount of the judgment or settlement you are including in income for the tax year. See Pub. 525, Taxable and Nontaxable Income, for more information.
A retiree who contributed to the cost of an annuity can exclude from income a part of each payment received as a tax-free return of the retiree's investment. If the retiree dies before the entire investment is recovered tax free, any unrecovered investment can be deducted on the retiree's final income tax return. See Pub. 575, Pension and Annuity Income, for more information about the tax treatment of pensions and annuities.
The two chapters in this part explain how to figure your tax. They also discuss tax credits that, unlike deductions, are subtracted directly from your tax and reduce your tax dollar for dollar. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:
After you have figured your income and deductions your next step is to figure your tax. This chapter discusses:
Publication
Form (and Instructions)
Your income tax is based on your taxable income. After you figure your income tax and AMT, if any, subtract your tax credits and add any other taxes you may owe. The result is your total tax. Compare your total tax with your total payments to determine whether you are entitled to a refund or must make a payment. This section provides a general outline of how to figure your tax. You can find step-by-step directions in the Instructions for Form 1040.
This section briefly discusses an additional tax you may have to pay. The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from this special treatment may have to pay at least a minimum amount of tax through an additional tax called AMT. You may have to pay the AMT if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than a certain amount. See Form 6251, Alternative Minimum Tax—Individuals.
If you file by the due date of your return (not counting extensions) — April 18, 2022, for most people — you can have the IRS figure your tax for you on Form 1040 or 1040-SR. If the IRS figures your tax and you paid too much, you will receive a refund. If you didn’t pay enough, you will receive a bill for the balance. To avoid interest or the penalty for late payment, you must pay the bill within 30 days of the date of the bill or by the due date for your return, whichever is later. The IRS can also figure the credit for the elderly or the disabled and the earned income credit for you.
After you complete the line entries for the tax form you are filing, fill in your name and address. Enter your social security number in the space provided. If you are married, enter the social security numbers of you and your spouse, even if you file separately. Sign and date your return and enter your occupation(s). If you are filing a joint return, both you and your spouse must sign it. Enter your daytime phone number in the space provided. This may help speed the processing of your return if we have a question that can be answered over the phone. If you are filing a joint return, you may enter either your or your spouse's daytime phone number. If you want to allow your preparer, a friend, a family member, or any other person you choose to discuss your 2021 tax return with the IRS, check the “Yes” box in the “Third Party Designee” area on your return. Also, enter the designee's name, phone number, and any five digits the designee chooses as their personal identification number (PIN). If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any questions that may arise during the processing of your return. Fill in and attach any schedules and forms asked for on the lines you completed to your paper return. Attach a copy of each of your Forms W-2 to your paper return. Also, attach to your paper return any Form 1099-R you received that has withholding tax in box 4. Mail your return to the Internal Revenue Service Center for the area where you live. A list of Service Center addresses is in the instructions for your tax return.
If you want the IRS to figure your tax. Read Form 1040 or 1040-SR, lines 1 through 15, and Schedule 1 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedule 1 (Form 1040), if applicable. Don’t complete Form 1040 or 1040-SR, line 16 or 17. If you are filing a joint return, use the space on the dotted line next to the words “Adjusted Gross Income” on the first page of your return to separately show your taxable income and your spouse's taxable income. Read Form 1040 or 1040-SR, lines 19 through 33, and Schedules 2 and 3 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedules 2 and 3 (Form 1040), if applicable. Don’t fill in Form 1040 or 1040-SR, lines 22, 24, 33, or 34 through 38. Don’t fill in Schedule 2 (Form 1040), line 1 or 3. Also, don’t complete Schedule 3 (Form 1040), line 6d, if you are completing Schedule R (Form 1040), or Form 1040 or 1040-SR, line 27a, if you want the IRS to figure the credits shown on those lines.
Earned income credit. If you can take this credit, the IRS can figure it for you. Enter “EIC” on the dotted line on Form 1040 or 1040-SR, line 27a. If you elect to use your nontaxable combat pay in figuring your EIC, enter “NCP” and the amount on the dotted line on Form 1040 or 1040-SR, line 27b. If you elect to use your 2019 earned income in figuring your EIC, enter the amount of your 2019 earned income on the dotted line on Form 1040 or 1040-SR, line 27c. If you have a qualifying child, you must fill in Schedule EIC (Form 1040), Earned Income Credit, and attach it to your paper return. If you don’t provide the child's social security number on Schedule EIC, line 2, the credit will be reduced or disallowed unless the child was born and died in 2021. If your credit for any year after 1996 was reduced or disallowed by the IRS, you may also have to file Form 8862 with your return. For details, see the Instructions for Form 1040.
Schedule 8812 (Form 1040). The Schedule 8812 (Form 1040) and its instructions have been revised to be the single source for figuring and reporting the child tax credit and credit for other dependents. The instructions now include all applicable worksheets for figuring these credits. As a result, Pub. 972, Child Tax Credit, won’t be revised. For prior-year versions of Pub. 972, go to IRS.gov/Pub972. Enhanced child tax credit. For 2021, the child tax credit applies to qualifying children who have not attained age 18 by the end of 2021. Also, the initial amount of the child tax credit is increased to $3,600 for each qualifying child who hasn't attained age 6 by the end of 2021 and $3,000 for each other qualifying child who has not attained age 18 by the end of 2021. The credit for other dependents has not been enhanced. Simplified refundable child tax credit. If you meet certain residency requirements, your child tax credit will be fully refundable and easier to figure. This means you can claim the credit even if you didn't work and even if you receive no income. If you do not meet the residency requirements, you will figure your child tax credit and additional child tax credit in a manner similar to how these credits were figured for 2020. Letter 6419. If you received advance child tax credit payments during 2021, you will receive Letter 6419. Keep this letter for your records. You will use the information from this letter to figure the amount of child tax credit to claim on your 2021 tax returns or the amount of additional tax you must report on Schedule 2 (Form 1040). Additional tax on excess advance child tax credit payments. If you received advance child tax credit payments during 2021 and the credits you figure using Schedule 8812 (Form 1040), Credits for Qualifying Children and Other Dependents, are less than what you received, you may owe an additional tax. Complete Schedule 8812 (Form 1040) to determine if you must report an additional tax on Schedule 2 (Form 1040).
Abbreviations used throughout this chapter. The following abbreviations will be used in this chapter when appropriate.
Other abbreviations may be used in this chapter and will be defined as needed. Delayed refund for returns claiming the ACTC. The IRS can’t issue refunds before mid-February 2022 for returns that properly claim the ACTC. This time frame applies to the entire refund, not just the portion associated with the ACTC.
The CTC is a credit that may reduce your tax by as much as $3,000 ($3,600 in the case of a qualifying child who has not attained age 6 as of the close of the calendar year in which the tax year of the taxpayer begins) for each child who qualifies you for the credit. See Limits on the RCTC, NCTC, and ODC, later. The ACTC is a credit you may be able to take if you are not able to claim the full amount of the CTC. The ODC is a credit that may reduce your tax by as much as $500 for each eligible dependent. .
Form (and Instructions)
For these and other useful items, go to IRS.gov/Forms.
Each qualifying child you use for RCTC, NCTC, or ACTC must have the required SSN. If you have a qualifying child who doesn’t have the required SSN, you can’t use the child to claim the RCTC, NCTC, or ACTC on either your original or amended 2021 tax return. The required SSN is one that is valid for employment and is issued before the due date of your 2021 return (including extensions). If your qualifying child was born and died in 2021 and you don’t have an SSN for the child, attach a copy of the child’s birth certificate, death certificate, or hospital records. The document must show the child was born alive. If your qualifying child doesn’t have the required SSN but has another type of TIN issued on or before the due date of your 2021 return (including extensions), you may be able to claim the ODC for that child. See Credit for Other Dependents (ODC), later.
If you erroneously claim the RCTC, NCTC, ACTC, or ODC, and it is later determined that your error was due to reckless or intentional disregard of the RCTC, NCTC, ACTC, or ODC rules, you will not be allowed to claim any of these credits for 2 years. If it is determined that your error was due to fraud, you will not be allowed to claim any of these credits for 10 years. You may also have to pay penalties.
Beginning in July and through December 2021, the IRS issued advance payments of the 2021 RCTC to taxpayers with qualifying children. The advance payments were early payments of 50% of the amount of RCTC estimated to be claimed on the 2021 tax return based on information from either a 2019 or 2020 tax return, including information provided to the IRS through an online non-filer tool to receive economic impact payments or advance child tax credit payments, and information provided in the child tax credit update portal on IRS.gov/CTCPortal. Changes throughout the year, such as a change in filing status or change in the number of qualifying children, could impact the amount of child tax credit you are eligible to receive on your 2021 tax return. . If you received advance child tax credit payments during 2021 but the amount of the credits you are eligible for on your 2021 tax return are less than what you received, you may owe an additional tax. See Schedule 8812 (Form 1040) and its instructions for more information.
The IRS will issue Letter 6419, which will report the total amount of advance child tax credit payments issued to you and the number of qualifying children the IRS used to figure your advance child tax credit payments. You will need Letter 6419 to figure the amount of child tax credit to claim on your tax return or the amount of additional tax you must report. If you did not receive Letter 6419, go to the child tax credit update portal at IRS.gov/CTCPortal or call 800-908-4184 to get the information needed. See Schedule 8812 (Form 1040) and its instructions for more information.
The CTC is for individuals who claim a child as a dependent if the child meets additional conditions (described later).
This credit is different from and in addition to the credit for child and dependent care expenses and the earned income credit that you may also be eligible to claim. The maximum amount you can claim for the credit is $3,000 ($3,600 in the case of a qualifying child who has not attained age 6 as of the close of the calendar year in which the tax year of the taxpayer begins) for each child who qualifies you for the CTC. But, see Limits on the RCTC, NCTC, and ODC, later. For more information about claiming the CTC, see Claiming the RCTC, NCTC, and ODC, later.
A child qualifies you for the CTC if the child meets all of the following conditions.
Example. Your son turned 18 on December 30, 2021. He is a citizen of the United States and you claimed him as a dependent on your return. You can't use him to claim the RCTC, NCTC, or ACTC because he was not under age 18 at the end of 2021. .
In addition to being a qualifying child for the CTC, your child must have the required SSN. The required SSN is one that is valid for employment and that is issued by the Social Security Administration (SSA) before the due date of your 2021 return (including extensions). . If your child was a U.S. citizen when the child received the SSN, the SSN is valid for employment. If “Not Valid for Employment” is printed on your child’s social security card and your child’s immigration status has changed so that your child is now a U.S. citizen or permanent resident, ask the SSA for a new social security card without the legend. However, if “Valid for Work Only With DHS Authorization” is printed on your child’s social security card, your child has the required SSN only as long as the Department of Homeland Security (DHS) authorization is valid. If your child doesn’t have the required SSN, you can't use the child to claim the CTC (or ACTC) on either your original or amended 2021 tax return.
This credit is for individuals with a dependent who meets additional conditions (described later).
This credit is different from and in addition to the credit for child and dependent care expenses that you may also be eligible to claim. The maximum amount you can claim for this credit is $500 for each qualifying dependent. See Limits on the RCTC, NCTC, and ODC, later. For more information about claiming the ODC, see Claiming the RCTC, NCTC, and ODC, later.
A person qualifies you for the ODC if the person meets all of the following conditions.
Example. Your 10-year-old nephew lives in Mexico and qualifies as your dependent. He is not a U.S. citizen, U.S. national, or U.S. resident alien. You can’t use him to claim the ODC. .
In addition to being a qualifying person for the ODC, the person must have an SSN, ITIN, or ATIN issued to the dependent on or before the due date of your 2021 return (including extensions). If the person has not been issued an SSN, ITIN, or ATIN by that date, you can’t use the person to claim the ODC on either your original or amended 2021 return. For more information, see Taxpayer Identification Number Requirements, earlier.
The credit amount of your RCTC, NCTC, or ODC may be reduced if your modified adjusted gross income (AGI) is more than the amounts shown below for your filing status.
For more information about limits on the RCTC, NCTC, and ODC, see the Instructions for Schedule 8812 (Form 1040).
To claim the RCTC, NCTC, or ODC, be sure you meet the following requirements.
.
2021 Tax Computation Worksheet—Line 16
Section A—Use if your filing status is Single. Complete the row below that applies to you.
Section B—Use if your filing status is Married filing jointly or Qualifying widow(er). Complete the row below that applies to you.
Section C—Use if your filing status is Married filing separately. Complete the row below that applies to you.
Section D—Use if your filing status is Head of household. Complete the row below that applies to you.
2021 Tax Rate Schedules
Schedule X —If your filing status is Single
Schedule Y-1 —If your filing status is Married filing jointly or Qualifying widow(er)
Schedule Y-2 —If your filing status is Married filing separately
Schedule Z —If your filing status is Head of household
This section explains your rights as a taxpayer and the processes for examination, appeal, collection, and refunds.
We accept most taxpayers’ returns as filed. If we inquire about your return or select it for examination, it does not suggest that you are dishonest. The inquiry or examination may or may not result in more tax. We may close your case without change; or, you may receive a refund. The process of selecting a return for examination usually begins in one of two ways. First, we use computer programs to identify returns that may have incorrect amounts. These programs may be based on information returns, such as Forms 1099 and W-2, on studies of past examinations, or on certain issues identified by compliance projects. Second, we use information from outside sources that indicates that a return may have incorrect amounts. These sources may include newspapers, public records, and individuals. If we determine that the information is accurate and reliable, we may use it to select a return for examination. Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, explains the rules and procedures that we follow in examinations. The following sections give an overview of how we conduct examinations.
If you do not agree with the examiner's proposed changes, you can appeal them to the Appeals Office of the IRS. Most differences can be settled without expensive and time-consuming court trials. Your appeal rights are explained in detail in both Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree, and Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. If you do not wish to use the Appeals Office or disagree with its findings, you may be able to take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live. If you take your case to court, the IRS will have the burden of proving certain facts if you kept adequate records to show your tax liability, cooperated with the IRS, and meet certain other conditions. If the court agrees with you on most issues in your case and finds that our position was largely unjustified, you may be able to recover some of your administrative and litigation costs. You will not be eligible to recover these costs unless you tried to resolve your case administratively, including going through the appeals system, and you gave us the information necessary to resolve the case.
Publication 594, The IRS Collection Process, explains your rights and responsibilities regarding payment of federal taxes. It describes:
Your collection appeal rights are explained in detail in Publication 1660, Collection Appeal Rights.
Potential third party contacts. Generally, the IRS will deal directly with you or your duly authorized representative. However, we sometimes talk with other persons if we need information that you have been unable to provide, or to verify information we have received. If we do contact other persons, such as a neighbor, bank, employer, or employees, we will generally need to tell them limited information, such as your name. The law prohibits us from disclosing any more information than is necessary to obtain or verify the information we are seeking. Our need to contact other persons may continue as long as there is activity in your case. If we do contact other persons, you have a right to request a list of those contacted. Your request can be made by telephone, in writing, or during a personal interview.
You may file a claim for refund if you think you paid too much tax. You must generally file the claim within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. The law generally provides for interest on your refund if it is not paid within 45 days of the date you filed your return or claim for refund. Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, has more information on refunds. If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund.
TAS is an independent organization within the IRS that can help protect your taxpayer rights. We can offer you help if your tax problem is causing a hardship, or you've tried but haven't been able to resolve your problem with the IRS. If you qualify for our assistance, which is always free, we will do everything possible to help you. Visit TaxpayerAdvocate.IRS.gov or call 1-877-777-4778.
The IRS provides the following sources for forms, publications, and additional information.
Abroad, citizens traveling or working, Employees of foreign governments or international organizations., Foreign Employer (see also Foreign employment) Absence, temporary, Temporary absences., Temporary absences. Accelerated death benefits, Accelerated Death Benefits, Exclusion for terminal illness. Accident insurance, Accident or Health Plan Cafeteria plans, Cafeteria plans. Long-term care, Long-term care coverage., Long-Term Care Insurance Contracts Accidental death benefits, Accidental death benefits. Accounting methods, Accounting Methods Accrual method (see Accrual method taxpayers) Cash method (see Cash method taxpayers) Accounting periods, Accounting Periods Calendar year, When Do I Have To File?, Accounting Periods, Accounting period. Change in, standard deduction not allowed, Persons not eligible for the standard deduction. Fiscal year, Accounting Periods, Fiscal year taxpayers. Fringe benefits, Accounting period. Accrual method taxpayers, Accrual method. Taxes paid during tax year, deduction of, You must pay the tax during your tax year. Accuracy-related penalties, Accuracy-related penalty. Activities not for profit, Activity not for profit. Address, Name and Address Change of, Change of Address Foreign, Foreign address. P.O. box, P.O. box. Address, filing, Where To File Adjusted gross income (AGI) Retirement savings contribution credit, Special Rules Adjustments, Adjustments and tax preference items. Administrators, estate (see Executors and administrators) Adopted child, Exception for adopted child., Adopted child., Adopted child., Taxpayer identification numbers for adoptees. Adoption ATIN, Adoption taxpayer identification number (ATIN). Child tax credit, Adopted child. (see also Child tax credit) Credits Married filing separately, Special Rules Employer assistance, Adoption Assistance Taxpayer identification number, Adoption taxpayer identification number (ATIN)., Taxpayer identification numbers for aliens. Age Children's investments (see Children, subheading: Investment income of child under age 18) Gross income and filing requirements (Table 1-1), IRAs Distribution prior to age 59 1/2, Age 59½ rule. Distribution required at age 72, IRA owners., Excess Accumulations (Insufficient Distributions) Roth IRAs, Is there an age limit for contributions?, Must you withdraw or use Roth IRA assets? Standard deduction for age 65 or older, Higher Standard Deduction for Age (65 or Older) Age test, Age Test Agents Income paid to, Payment to an agent. Signing return, When someone can sign for you. Agricultural workers (see Farmers) (see Farmworkers) Agriculture (see Farming) Alaska Permanent Fund dividends, Alaska Permanent Fund dividend. Alaska Unemployment Compensation Fund, Contributions to state benefit funds. Alcoholic beverages IRA prohibited transactions in, Collectibles. Aliens Dual-status (see Dual-status taxpayers) Filing required, Aliens Nonresident (see Nonresident aliens) Resident (see Resident aliens) Alimony Reporting of income, Alimony. Alternative filing methods Electronic (see E-file) Alternative minimum tax (AMT), Alternative Minimum Tax (AMT) Ambulance service personnel Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Amended returns, Amended Returns and Claims for Refund, Form 1040-X., Filing Form 1040-X. (see also Form 1040-X) Itemized deduction, change to standard deduction, Changing your mind. Standard deduction, change to itemized deductions, Changing your mind. American citizens abroad, U.S. Citizens and Resident Aliens Living Abroad (see also Citizens outside U.S.) Employment (see Foreign employment) American Indians (see Indians) American Samoa Income from, Individuals With Income From U.S. Possessions Annuities Decedent's unrecovered investment in, Form W-2. IRAs as, Kinds of traditional IRAs. Unrecovered investment, Unrecovered Investment in Annuity Withholding, Form W-2., Pensions and Annuities Annulled marriages Filing status, Annulled marriages. Anthrax incidents (see Terrorist attacks) Antiques (see Collectibles) Appraisal fees, Appraisal Fees Archer MSAs, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Contributions, Archer MSA contributions. Armed Forces Combat zone Extension to file return, Individuals Serving in Combat Zone Signing return for spouse, Spouse in combat zone. Dependency allotments, Armed Forces dependency allotments. Disability pay, Disability. Disability pensions, Military and Government Disability Pensions GI Bill benefits, Tuition payments and allowances under the GI Bill. Military quarters allotments, Tax-exempt military quarters allowances. Real estate taxes when receiving housing allowance, Ministers’ and military housing allowances. Rehabilitative program payments, Veterans' benefits. Retiree's pay withholding, Military retirees. Retirees' pay Taxable income, Military retirement pay. Wages, Military Assistance (see Tax help) Assistance, tax (see Tax help) ATIN (Adoption taxpayer identification number), Adoption taxpayer identification number (ATIN). Attachment of wages, Garnished wages. Attachments to return, Attachments Attorney contingency fee As income, Court awards and damages. Attorney fees, whistleblower awards As income, Court awards and damages. Attorneys' fees, Legal Expenses, Personal Legal Expenses Automatic extension of time to file, Automatic Extension, When to file. Form 4868, E-file options. Awards (see Prizes and awards) Babysitting, Babysitting. Back pay, award for, Back pay awards. Emotional distress damages under title VII of Civil Rights Act of 1964, Court awards and damages. Backup withholding, Backup Withholding, Backup withholding., Backup withholding. Penalties, Penalties. Bad debts Claim for refund, Exceptions for special types of refunds. Recovery, Recoveries Balance due, Refund or balance due. Bankruptcy Canceled debt not deemed to be income, Excluded debt. Banks IRAs with, When and How Can a Traditional IRA Be Opened? Barter income, Bartering Definition of bartering, Bartering Form 1099-B, Form 1099-B from barter exchange. Basis Cost basis IRAs for nondeductible contributions, Cost basis., Partly taxable. Beneficiaries, Estate and trust income., Losses. (see also Estate beneficiaries) (see also Trust beneficiaries) Bequests, Estate and trust income., Losses., Gifts and inheritances. (see also Estate beneficiaries) (see also Inheritance) Birth of child, Death or birth of child. Head of household, qualifying person to file as, Death or birth., Death or birth. Social security number to be obtained, Born and died in 2021. Birth of dependent, Death or birth. Blind persons Exemption from withholding, Age 65 or older or blind. Standard deduction for, , Higher Standard Deduction for Blindness Bonds Amortization of premium, Amortizable Premium on Taxable Bonds Issued at discount, Original Issue Discount (OID) Original issue discount, Original Issue Discount (OID) Sale of, Bonds Sold Between Interest Dates Savings, U.S. Savings Bonds, Series H and HH bonds., Series EE and Series I bonds. Tax-exempt, State or Local Government Obligations Bonuses, Supplemental Wages, Bonuses and awards., Employee awards or bonuses. Bookkeeping (see Recordkeeping requirements) Breach of contract Damages as income, Court awards and damages. Bribes, Bribes., List of Nondeductible Expenses Brokers IRAs with, When and How Can a Traditional IRA Be Opened? Commissions, Brokers' commissions., Brokers' commissions. Burial expenses, List of Nondeductible Expenses Business expenses Job search expenses, Job interview expenses. Reimbursements, Expense allowances., Allowances and reimbursements. Returning excess business expenses, Expense allowances. Business tax credits Claim for refund, Exceptions for special types of refunds. Cafeteria plans, Cafeteria plans. Calendar year taxpayers Accounting periods, When Do I Have To File?, Accounting Periods, Accounting period. Filing due date, When Do I Have To File? California Nonoccupational Disability Benefit Fund, Contributions to state benefit funds. Campaign contributions, Campaign contributions. Presidential Election Campaign Fund, Presidential Election Campaign Fund Campaign expenses, Campaign Expenses Canada Resident of, Citizen or Resident Test, Child in Canada or Mexico. Cancellation of debt, Canceled Debts Exceptions to treatment as income, Exceptions Capital assets Coal and iron ore, Coal and iron ore. Capital expenses, Capital expenses. Capital gains or losses Hobbies, sales from collections, Hobby losses. Sale of personal items, Sale of personal items. Carpools, Carpools. Carrybacks Business tax credit carrybacks, Exceptions for special types of refunds. Cars, Transportation, Transporting school children. (see also Travel and transportation) Personal property taxes on, deduction of, Personal Property Taxes Cash Rebates, Cash rebates. Cash method taxpayers, Cash method. Real estate transactions, tax allocation, Division of real estate taxes between buyers and sellers. Taxes paid during tax year, deduction of, You must pay the tax during your tax year. Cash rebates, Cash rebates. Casualty insurance Reimbursements from, Casualty insurance and other reimbursements. Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Certificates of deposit (CDs), Certificates of deposit (CDs)., Individual Retirement Arrangements (IRAs) (see also Individual retirement arrangements (IRAs)) Change of address, Change of Address Change of name, Name change., Name changed. Chaplains Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Charitable contribution deduction Standard deduction, What's New Charitable contributions Gifts to reduce public debt, Gift To Reduce Debt Held by the Public Charitable distributions, qualified, Qualified charitable distributions (QCDs). Check-writing fees, Check-Writing Fees on Personal Account Checks Constructive receipt of, Check received or available. Child and dependent care credit Married filing separately, Special Rules Child born alive, Child born alive. Child care Babysitting, Babysitting. Care providers, Childcare providers. Expenses, Child care expenses. Child custody, Custodial parent and noncustodial parent. Child support, Child support payments. Child tax credit, Who Should File, Child tax credit., Child Tax Credit and Credit for Other Dependents, Qualifying Child for the CTC, Additional Child Tax Credit (ACTC) Claiming the credit, Claiming the RCTC, NCTC, and ODC Limit on credit, Limits on the RCTC, NCTC, and ODC Limits, Special Rules Married filing separately, Special Rules Child, qualifying, Qualifying Child Children, Adoption Assistance (see also Adoption) Additional child tax credit, Additional Child Tax Credit (ACTC) Adoption (see Adopted child) Babysitters, Babysitting. Birth of child Head of household, qualifying person to file as, Death or birth., Death or birth. Social security number to be obtained, Born and died in 2021. Care providers, Childcare providers. (see also Child care) Credit for, Who Should File (see also Child tax credit) Custody of, Custodial parent and noncustodial parent. Death of child Head of household, qualifying person to file as, Death or birth., Death or birth. Dividends of (see this heading: Investment income of child under age 18) Earnings of, Child's earnings. Filing requirements, Child's earnings. As dependents (Table 1-2), Do I Have To File a Return? Gifts to, Income from property given to a child. Investment income of child under age 18 Dependent filing requirements (Table 1-2), Do I Have To File a Return? Interest and dividends, Certain Children Under Age 19 or Full-Time Students Parents' election to report on Form 1040 or 1040-SR, Certain Children Under Age 19 or Full-Time Students Kidnapped, Kidnapped child., Kidnapped child. Signing return, parent for child, Spouse unable to sign. Standard deduction for, , Standard Deduction for Dependents Stillborn, Stillborn child. Support of (see Child support) Tax credit (see Child tax credit) Transporting school children, Transporting school children. Unearned income of, Tax on unearned income of certain children. Chronic illness Accelerated payment of life insurance proceeds (see Accelerated death benefits) Long-term care (see Long-term care insurance contracts) Citizen or resident test, Citizen or Resident Test Citizens outside U.S. Earned income exclusion, Reminders Employment (see Foreign employment) Extension of time to file, Individuals Outside the United States Filing requirements, U.S. Citizens and Resident Aliens Living Abroad Withholding from IRA distributions, IRA distributions delivered outside the United States. Civil suits, Court awards and damages. (see also Damages from lawsuits) Civil tax penalties (see Penalties) Clergy, Ministers. Housing, Clergy Real estate taxes when receiving housing allowance, Ministers’ and military housing allowances. Life insurance proceeds when chaplain died in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Pensions, Pension. Special income rules, Clergy Clerical help, deductibility of, Clerical Help and Office Rent Coal and iron ore, Coal and iron ore. Collectibles IRA investment in, Investment in Collectibles, Exception. Colleges and universities Education costs, Qualified tuition programs (QTPs). (see also Qualified tuition programs) Combat zone Extension to file return, Individuals Serving in Combat Zone Signing return for spouse, Spouse in combat zone. Commissions, Supplemental Wages Advance, Advance commissions and other earnings. IRAs with brokers, Brokers' commissions., Brokers' commissions. Sharing of (kickbacks), Kickbacks. Unearned, deduction for repayment of, Advance commissions and other earnings. Common law marriage, Considered married. Community property, Community property states., Community property. IRAs, Community property laws. Married filing separately, Community property states. Commuting expenses, Commuting Expenses Employer-provided commuter vehicle, Commuter highway vehicle. Compensation, Wages, Salaries, and Other Earnings (see also Wages and salaries) Defined for IRA purposes, What is compensation? Defined for Roth IRA purposes, Compensation. Employee, Employee Compensation Miscellaneous compensation, Miscellaneous Compensation Nonemployee, Nonemployee compensation. Unemployment, Unemployment compensation. Computation of tax, Computations Equal amounts, Equal amounts. Negative amounts, Negative amounts. Rounding off dollars, Rounding off dollars. Confidential information Privacy Act and paperwork reduction information, Reminders Constructive receipt of income, Constructive receipt., Payment to an agent., Constructive receipt. Contributions, Gift To Reduce Debt Held by the Public, Campaign contributions. (see also Campaign contributions) (see also Charitable contributions) Nontaxable combat pay, Nontaxable combat pay. Political, Political Contributions Reservist repayments, Qualified reservist repayments. Convenience fees, Credit or Debit Card Convenience Fees Conversion (see specific retirement or IRA plan) Cooperative housing Real estate taxes, deduction of, Tenant-shareholders in a cooperative housing corporation. Copyrights Infringement damages, Court awards and damages. Royalties, Royalties Corporations, S Corporation Income (see also S corporations) Director fees as self-employment income, Corporate director. Corrections (see Errors) Cost basis IRAs for nondeductible contributions, Cost basis., Partly taxable. Cost-of-living allowances, Government cost-of-living allowances. Coupon bonds, Coupon bonds. Court awards and damages (see Damages from lawsuits) Cousin, Cousin. Credit cards Benefits, taxability of insurance, Credit card insurance. Payment of taxes, Reminders Credit for child and dependent care expenses, Credit for child and dependent care expenses. Credit for other dependents, Child Tax Credit and Credit for Other Dependents, Credit for Other Dependents (ODC) Claiming the credit, Claiming the RCTC, NCTC, and ODC Limit on credit, Limits on the RCTC, NCTC, and ODC Qualifying person, Qualifying Person for the ODC Credit for the elderly or the disabled, Credit for the elderly or the disabled. Credit or debit cards Payment of taxes, E-file and pay by credit or debit card or by direct transfer from your bank account. Credits, Credits., Credit for child and dependent care expenses., Credit for the elderly or the disabled., Earned income credit. American opportunity, Special Rules Child tax (see Child tax credit) Credit for other dependents, Child Tax Credit and Credit for Other Dependents Earned income (see Earned income credit) Lifetime learning (see Lifetime learning credit) Custodial fees, Investment Fees and Expenses Custody of child, Custodial parent and noncustodial parent. Damages from lawsuits, Court awards and damages. Dating your return, Signatures Daycare centers, Childcare providers. (see also Child care) De minimis benefits, De Minimis (Minimal) Benefits Deadlines (see Due dates) Death (see Decedents) Death benefits Accelerated, Accelerated Death Benefits, Exclusion for terminal illness. Life insurance proceeds (see Life insurance) Public safety officers who died or were killed in line of duty, tax exclusion, Public Safety Officer Killed or Injured in the Line of Duty Death of child, Death or birth of child. Death of dependent, Death or birth. Debt instruments (see Bonds or Notes) Debts, Exceptions for special types of refunds., Recoveries (see also Bad debts) Canceled (see Cancellation of debt) Nonrecourse, Mortgage relief upon sale or other disposition. Paid by another, Debts paid for you. Public, gifts to reduce, Gift To Reduce Debt Held by the Public Recourse, Mortgage relief upon sale or other disposition. Refund offset against, Refunds., Offset against debts. Deceased taxpayers (see Decedents) Decedents, Surviving Spouses, Executors, Administrators, and Legal Representatives (see also Executors and administrators) Deceased spouse, Surviving Spouses, Executors, Administrators, and Legal Representatives Due dates, Filing for a decedent. Filing requirements, Surviving Spouses, Executors, Administrators, and Legal Representatives Savings bonds, Decedents. Spouse's death, Spouse died during the year., Spouse died. Standard deduction, Decedent's final return. Declaration of rights of taxpayers IRS request for information, Reminders Deductions, Recoveries, Standard Deduction (see also Recovery of amounts previously deducted) Casualty losses, Casualty and Theft Losses of Income-Producing Property Changing claim after filing, need to amend, Amended Returns and Claims for Refund Itemizing (see Itemized deductions) Pass-through entities, Indirect Deductions of Pass-Through Entities Repayments, Repayments Social security and railroad retirement benefits, Deductions Related to Your Benefits Standard deduction, Standard Deduction, Married persons who filed separate returns. Student loan interest deduction (see Student loans) Theft loss, Casualty and Theft Losses of Income-Producing Property Deferred compensation Limit, Elective deferrals. Nonqualified plans, Nonqualified deferred compensation plans. Delinquent taxes Real estate transactions, tax allocation, Real estate taxes for prior years. Delivery services, Private delivery services. Dependent taxpayer test, Dependent Taxpayer Test Dependents, Who Should File, Dependents (see also Child tax credit) Birth of, Death or birth. Born and died within year, Exception., Born and died in 2021. Death of, Death or birth. Filing requirements, Child's earnings. Earned income, unearned income, and gross income levels (Table 1-2), Do I Have To File a Return? Married, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Qualifying child, Qualifying Child Qualifying relative, Qualifying Relative Social security number, Dependent's SSN. Adoption taxpayer identification number, Adoption taxpayer identification number (ATIN)., Taxpayer identification numbers for aliens. Alien dependents, Born and died in 2021. Standard deduction for, Standard Deduction for Dependents Dependents not allowed to claim dependents, Dependent Taxpayer Test Depletion allowance, Depletion. Deposits Loss on, Loss on Deposits Depreciation Home computer, Depreciation on Home Computer Differential wage payments, Differential wage payments. Differential wages Wages for reservists Military reserves, Differential wage payments. Direct deposit of refunds, Refunds Directors' fees, Corporate director. Disabilities, persons with Accrued leave payment, Accrued leave payment. Armed Forces, Disability. Blind (see Blind persons) Cafeteria plans, Cafeteria plans. Credit for (see Elderly or disabled, credit for) Insurance costs, Cost paid by you. Military and government pensions, Military and Government Disability Pensions Public assistance benefits, Persons with disabilities. Reporting of disability pension income, Disability Pensions Retirement, pensions, and profit-sharing plans, Sickness and Injury Benefits, Retirement and profit-sharing plans. Signing of return by court-appointed representative, Court-appointed conservator, guardian, or other fiduciary. Social security and railroad retirement benefits, deductions for, Disability payments. Workers' compensation, Workers' Compensation Disabled Child, Permanently and totally disabled. Dependent, Disabled dependent working at sheltered workshop. Disaster Assistance Act of 1988 Withholding, Federal Payments Disaster relief, Terrorist attack or military action., Disaster relief payments. (see also Terrorist attacks) Disaster Relief and Emergency Assistance Act Grants, Disaster relief grants. Unemployment assistance, Types of unemployment compensation. Grants or payments, Disaster relief grants. Disclosure statement, Disclosure statement. Discount, bonds and notes issued at, Original Issue Discount (OID) Distributions Qualified charitable, Qualified charitable distributions (QCDs). Required minimum distributions, Required distributions., When Must You Withdraw IRA Assets? (Required Minimum Distributions) (see also Individual retirement arrangements (IRAs)) Dividends Alaska Permanent Fund (see Alaska Permanent Fund dividends) Fees to collect, Fees To Collect Interest and Dividends Stockholder debts when canceled as, Stockholder debt. Divorced parents, Children of divorced or separated parents (or parents who live apart)., Applying the tiebreaker rules to divorced or separated parents (or parents who live apart). Divorced taxpayers, Alimony. (see also Alimony) Child custody, Custodial parent and noncustodial parent. Estimated tax payments, Divorced Taxpayers Filing status, Divorced persons., Divorced persons. IRAs, Kay Bailey Hutchison Spousal IRA., Transfers Incident to Divorce Real estate taxes, allocation of, Divorced individuals. Domestic help Withholding, Household workers. Domestic help, can’t be claimed as dependent, Housekeepers, maids, or servants. Donations (see Charitable contributions) Down payment assistance, Down payment assistance. Dual-status taxpayers, Dual-status taxpayer. Joint returns not available, Nonresident alien or dual-status alien. Standard deduction, Persons not eligible for the standard deduction. Due dates, Amount you owe., When Do I Have To File?, Private delivery services. Extension (see Extension of time to file) Nonresident aliens' returns, Nonresident alien. Dues Club, Club Dues Dwelling units Cooperative (see Cooperative housing) E-file, Reminders, What's New, Electronic Filing Extensions of time to file, How to get the automatic extension. On time filing, Filing electronic returns on time. Early withdrawal from deferred interest account Higher education expenses, exception from penalty, Reminders IRAs Early distributions, defined, Early distributions defined. Penalties, Early distributions tax., Early Distributions Earned income Defined For purposes of standard deduction, Earned income defined. Dependent filing requirements (Table 1-2), Do I Have To File a Return? Earned income credit, Earned income credit. Filing claim, Who Should File Married filing separately, Special Rules Education Savings bond program, Education Savings Bond Program Education credits Married filing separately, Special Rules Education expenses Employer-provided (see Educational assistance) Tuition (see Qualified tuition programs) Educational assistance Employer-provided, Educational Assistance Scholarships (see Scholarships and fellowships) Tuition (see Qualified tuition programs) EIC (see Earned income credit) Elderly or disabled, credit for Married filing separately, Special Rules Elderly persons Credit for (see Elderly or disabled, credit for) Exemption from withholding, Age 65 or older or blind. Home for the aged, Home for the aged. Long-term care (see Long-term care insurance contracts) Nutrition Program for the Elderly, Nutrition Program for the Elderly. Standard deduction for age 65 or older, , Higher Standard Deduction for Age (65 or Older) Tax Counseling for the Elderly, Free Help With Your Return Election precinct officials Fees, reporting of, Election precinct official. Elective deferrals Limits, Elective deferrals. Electronic filing (see E-file) Electronic payment options, Reminders Electronic reporting Returns (see E-file) Embezzlement Reporting embezzled funds, Illegal activities. Emergency medical service personnel Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Emotional distress damages, Emotional distress. Employee benefits, Fringe Benefits, De Minimis (Minimal) Benefits (see also Fringe benefits) Employee business expenses Reimbursements, Expense allowances., Allowances and reimbursements. Returning excess, Expense allowances. Employee expenses Home computer, Depreciation on Home Computer Miscellaneous, Unreimbursed Employee Expenses Employees, Expense allowances., Fringe Benefits, De Minimis (Minimal) Benefits (see also Fringe benefits) Awards for service, Bonuses and awards. Business expenses (see Employee business expenses) Form W-4 to be filled out when starting new job, New Form W-4. Fringe benefits, Taxable Fringe Benefits Jury duty pay, Jury duty. Overseas employment (see Foreign employment) Employers E-file options, Through Employers and Financial Institutions Educational assistance from (see Educational assistance) Form W-4, having new employees fill out, New Form W-4. Overseas employment (see Foreign employment) Withholding rules, Rules Your Employer Must Follow Employment Agency fees, Employment agency fees. Taxes, Social security and Medicare taxes paid by employer. (see also Social security and Medicare taxes) FICA withholding, Form W-2. (see also Withholding) Employment taxes, , Determining Amount of Tax Withheld Using Form W-4, Credit for Withholding and Estimated Tax for 2021, Withholding Endowment proceeds, Endowment Contract Proceeds Energy assistance, Payments to reduce cost of winter energy. Energy conservation Measures and modifications, Energy conservation measure. Subsidies, Energy conservation subsidies. Utility rebates, Utility rebates. Equitable relief (see Innocent spouse relief) Errors Corrected wage and tax statement, Form Not Correct Discovery after filing, need to amend return, What if I Made a Mistake? Refunds, Interest on erroneous refund. Escrow Taxes placed in, when deductible, Taxes placed in escrow. Estate beneficiaries IRAs (see Individual retirement arrangements (IRAs)) Losses of estate, Losses. Receiving income from estate, Estate and trust income., Current income not required to be distributed. Estate tax Deduction, Taxes and Fees You Can’t Deduct Estates, Estate and trust income. (see also Estate beneficiaries) Income, Estate and trust income. Tax, Taxes and Fees You Can’t Deduct, Federal Estate Tax on Income in Respect of a Decedent (see also Estate tax) Estimated Credit for, Estimated Tax Payment vouchers, How To Pay Estimated Tax Estimated tax, Tax Withholding and Estimated Tax Amount to pay to avoid penalty, How much to pay to avoid a penalty. Avoiding, Who Doesn't Have To Pay Estimated Tax Change in estimated tax, Change in estimated tax. Credit for, , Credit for Withholding and Estimated Tax for 2021 Definition, Divorced taxpayers, Divorced Taxpayers Figuring amount of tax, How To Figure Estimated Tax First period, no income subject to estimated tax in, No income subject to estimated tax during first period. Fiscal year taxpayers, Fiscal year taxpayers. Married taxpayers, Married taxpayers. Name change, Name changed. Not required, Estimated tax not required. Overpayment applied to, Refunds Payment vouchers, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Payments, Estimated tax payments., How To Pay Estimated Tax Figuring amount of each payment, How To Figure Each Payment Schedule, When To Pay Estimated Tax, No income subject to estimated tax during first period. When to start, When To Start Who must make, Who Must Pay Estimated Tax Penalty for underpayment, , Underpayment penalty., Underpayment Penalty for 2021, IRS can figure the penalty for you. Saturday, Sunday, holiday rule, Saturday, Sunday, holiday rule. Separate returns, Separate Returns Social security or railroad retirement benefits, Tax withholding and estimated tax. State and local income taxes, deduction of, Estimated tax payments. Unemployment compensation, Tax withholding. Excise taxes, When Must You Withdraw IRA Assets? (Required Minimum Distributions) (see also Penalties) IRAs for failure to take minimum distributions, When Must You Withdraw IRA Assets? (Required Minimum Distributions) Roth IRAs, What if You Contribute Too Much? Exclusions from gross income Accelerated death benefits, Accelerated Death Benefits Canceled debt, Excluded debt. Commuting benefits for employees, Exclusion limit. De minimis benefits, De Minimis (Minimal) Benefits Disability pensions of federal employees and military, Military and Government Disability Pensions, Conditions for exclusion. Education Savings Bond Program, Interest on qualified savings bonds. Educational assistance from employer, Educational Assistance Elective deferrals, limit on exclusion, Elective deferrals. Employee awards, Employee achievement award. Energy conservation subsidies, Energy conservation subsidies., Utility rebates. Foreign earned income, Reminders Frozen deposit interest, Interest on frozen deposits. Group-term life insurance, Entire cost excluded. Long-term care insurance contracts, Long-Term Care Insurance Contracts, Limit on exclusion. Parking fees, employer-provided, Transportation Public safety officers who died or were killed in line of duty, death benefits, Public Safety Officer Killed or Injured in the Line of Duty Sale of home, Sale of home. Scholarships, Scholarships and fellowships. Strike benefits, Strike and lockout benefits. Executors and administrators, Surviving Spouses, Executors, Administrators, and Legal Representatives Exempt-interest dividends, Exempt-interest dividends. Exemptions From withholding, Exemption From Withholding Expenses paid by another, Expenses paid by another. Extension of time to file, Extensions of Time To File Automatic, Automatic Extension, When to file. Citizens outside U.S., Individuals Outside the United States E-file options, How to get the automatic extension. Inclusion on return, When you file your return. Failure to comply with tax laws (see Penalties) Fair rental value, Fair rental value defined. Family, Child's earnings., Adopted child. (see also Child tax credit) (see also Children) Farmers Estimated tax, Special rules for farmers, fishermen, and higher income taxpayers. Withholding, Farmworkers. Farming Activity not for profit, Activity not for profit. Canceled debt, treatment of, Excluded debt. Federal employees Accrued leave payment, Accrued leave payment. Cost-of-living allowances, Government cost-of-living allowances. Disability pensions, Military and Government Disability Pensions Based on years of service, Pension based on years of service. Exclusion, conditions for, Conditions for exclusion. Terrorist attack, Terrorist attack or military action. FECA payments, Federal Employees' Compensation Act (FECA). Federal Employees' Compensation Act (FECA) payments, Federal Employees' Compensation Act (FECA). Federal government Employees (see Federal employees) Federal income tax Not deductible, Taxes and Fees You Can’t Deduct Federal judges Employer retirement plan coverage, Federal judges. Fees, Fees for services. (see also specific types of deductions and income) Professional license, Professional Accreditation Fees Fellowships (see Scholarships and fellowships) FICA withholding, Form W-2., , Social security and Medicare taxes paid by employer. (see also Social security and Medicare taxes) (see also Withholding) Fiduciaries, Surviving Spouses, Executors, Administrators, and Legal Representatives, Trustees' fees., Trustees' fees. (see also Executors and administrators) (see also Trustees) Fees for services, Personal representatives. Prohibited transactions, Prohibited Transactions Figuring taxes and credits, Worksheet 7-1., Figuring Your Tax (see also Worksheets) Filing requirements, Filing Information, Criminal Penalties, Married Filing Separately (see also Married filing separately) Calendar year filers, When Do I Have To File? Citizens outside U.S., U.S. Citizens and Resident Aliens Living Abroad Dependents, Do I Have To File a Return?, Child's earnings. Electronic (see E-file) Extensions, Extensions of Time To File Gross income levels (Table 1-1), Individual taxpayers, Individuals—In General Joint filing, Married Filing Jointly, Accounting period., Relief from joint responsibility. (see also Joint returns) Late filing penalties (see Penalties) Most taxpayers (Table 1-1), Unmarried persons (see Single taxpayers) When to file, When Do I Have To File? Where to file, Where Do I File? Who must file, Do I Have To File a Return?, Who Should File Filing status, Filing status., Filing Status, Death or birth. Annulled marriages, Annulled marriages. Change to, after time of filing, Amended Returns and Claims for Refund Divorced taxpayers, Divorced persons. Head of household, Head of household or qualifying widow(er)., Head of Household Qualifying person to file as, Qualifying Person Joint returns, Married Filing Jointly Married filing separately, Married Filing Separately Surviving spouse, Head of household or qualifying widow(er). Unmarried persons, Individuals—In General, Unmarried persons. (see also Single taxpayers) Final return for decedent Standard deduction, Decedent's final return. Financial institutions, When and How Can a Traditional IRA Be Opened? (see also Banks) Financially disabled persons, Financially disabled. Fines, Filing late., Filing late., Paying tax late., Criminal Penalties (see also Penalties) Deductibility, Fines and Penalties Firefighters Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Volunteer firefighters IRAs, Volunteer firefighters. Fiscal year, Accounting Periods, Fiscal year taxpayers. Fishermen Estimated tax, Special rules for farmers, fishermen, and higher income taxpayers. Indian fishing rights, Indian fishing rights. Food benefits Nutrition program for the elderly, Nutrition Program for the Elderly. Food stamps, Support provided by the state (welfare, food stamps, housing, etc.). Foreign employment, Employees of foreign governments or international organizations., Foreign Employer Employment abroad, Employment abroad. Social security and Medicare taxes, Social security and Medicare taxes. U.S. citizen, U.S. citizen. Waiver of alien status, Waiver of alien status. Foreign governments, employees of, Employees of international organizations or foreign governments. Foreign income Earned income exclusion, Reminders Reporting of, Reminders Foreign income taxes Deduction of, Foreign Income Taxes Form 1116 to claim credit, Foreign income taxes. Schedule A or Form 1040 or 1040-SR reporting, Foreign income taxes. Definition of, Foreign taxes. Foreign nationals (see Resident aliens) Foreign students, Foreign students' place of residence. Forgiveness of debt (see Cancellation of debt) Form, Nonresident alien., Pension., What isn’t covered in this chapter. 1040, How to claim dependents., Form 1040 or 1040-SR Line Entries Alien taxpayer identification numbers, Born and died in 2021. Armed Forces' retirement pay, Military retirement pay. Child care providers, Childcare providers. Clergy pension, Pension. Corporate director fees, Corporate director. Disability retirement pay, Disability Pensions FECA benefits, Railroad sick pay. Foster-care providers, Reporting taxable payments. Kickbacks, Kickbacks. Notary fees, Notary public. Oil, gas, or mineral interest royalties, Royalties Rental income and expenses, Reporting business income and expenses. Wages and salary reporting, Form W-2. Workers' compensation, Return to work. 1040 or 1040-SR Address, Name and Address Attachments to, Form 1040 or 1040-SR. IRAs, Reporting taxable distributions on your return., Filing a tax return. Presidential Election Campaign Fund, Presidential Election Campaign Fund Railroad retirement benefits, reporting on, Reporting on Form 1040 or 1040-SR. Social security benefits, reporting on, Reporting on Form 1040 or 1040-SR. Use of, Widow(er)., Married Filing Jointly, How to file. 1040 or 1040-SR, Schedule A Charitable contributions, Gift To Reduce Debt Held by the Public 1040 or 1040-SR, Schedule SE, Self-Employed Persons 1040, Schedule A Unearned commission, deduction for repayment of, Advance commissions and other earnings. 1040, Schedule C Barter income, Bartering Child care providers, Childcare providers. Corporate director fees, Corporate director. Forgiveness of debts, Canceled Debts Foster-care providers, Reporting taxable payments. Kickbacks, Kickbacks. Notary fees, Notary public. Oil, gas, or mineral interest royalties, Royalties Rental income and expenses, Reporting business income and expenses. 1040, Schedule E Royalties, Royalties 1040, Schedule SE, Housing. 1040-NR Nonresident alien return, Nonresident alien. 1040-X Amended individual return, Form 1040-X. Annulled marriages, Annulled marriages. Change of filing status, Joint Return After Separate Returns Completing, Completing Form 1040-X. Filing, Filing Form 1040-X. Itemized deduction, change to standard deduction, Changing your mind. Standard deduction, change to itemized deductions, Changing your mind. 1065 Partnership income, Schedule K-1 (Form 1065). 1098 Mortgage interest statement, Mortgage interest refund. 1099 Taxable income report, Form 1099. 1099-B Barter income, Form 1099-B from barter exchange. 1099-C Cancellation of debt, Form 1099-C. 1099-DIV Dividend income statement, Stock you elected to include in income. 1099-G State tax refunds, State tax refund. 1099-INT, Form 1099-INT., Form 1099-INT. 1099-MISC Nonemployee compensation, Nonemployee compensation. 1099-OID, Form 1099-OID. 1099-R, Form 1099-INT for U.S. savings bonds interest. IRA distributions, Distributions reported on Form 1099-R., Form 5329 not required. Life insurance policy surrendered for cash, Surrender of policy for cash. Retirement plan distributions, Form W-2. 1120S S corporation income, Schedule K-1 (Form 1120-S). 2555, Foreign earned income. 2848 Power of attorney and declaration of representative, Power of attorney., Power of attorney. 3115, Change from method 2. 3800 General business credit, Exceptions for special types of refunds. 4506, Copies of tax returns. 4506-T Tax return transcript request, Copies of tax returns. 4868, E-file options., No SSN. Automatic extension of time to file, E-file options., No SSN. Filing electronic form, E-file using your personal computer or a tax professional. Filing paper form, Filing a paper Form 4868. 5329 Required minimum distributions, failure to take, Reporting Additional Taxes, Not filing a tax return., Form 5329 not required. 56 Notice Concerning Fiduciary Relationship, Court-appointed conservator, guardian, or other fiduciary. 6251, More information. 8275 Disclosure statement, Disclosure statement. 8275-R Regulation disclosure statement, Disclosure statement. 8379 Injured spouse claim, Joint return and injured spouse. 8606 IRA contributions, Nondeductible, Reminders, Form 8606., Form 8606. IRA contributions, Recharacterization of, Reporting a recharacterization. 8615, Tax on unearned income of certain children. 8814, Tax on unearned income of certain children. 8815, Form 8815. 8818, Education Savings Bond Program 8822 Change of address, Change of Address 8839 Qualified adoption expenses, Adoption Assistance 8853 Accelerated death benefits, Form 8853. Archer MSAs and long-term care insurance contracts, Archer MSA contributions. 8857 Innocent spouse relief, Relief from joint responsibility. 8879 Authorization for E-file provider to use self-selected PIN, Using a Tax Professional 9465 Installment agreement request, Installment Agreement Form 8919 Uncollected social security and Medicare tax on wages, Form W-2. RRB-1042S Railroad retirement benefits for nonresident aliens, What isn’t covered in this chapter. RRB-1099 Railroad retirement benefits, , What isn’t covered in this chapter. SS-5 Social security number request, No SSN., No SSN. SSA-1042S Social security benefits for nonresident aliens, What isn’t covered in this chapter. SSA-1099 Social security benefits, W-2 Election precinct officials' fees, Election precinct official. Employer retirement plan participation indicated, Are You Covered by an Employer Plan? Employer-reported income statement, Form W-2., Form W-2., Form W-2., Back pay awards., Accrued leave payment., Restricted Property, Stock you elected to include in income. Fringe benefits, Form W-2., Long-term care coverage., Archer MSA contributions., Adoption Assistance W-2G Gambling winnings withholding statement, Form W-2G. W-4V Voluntary withholding request, Tax withholding. W-7 Individual taxpayer identification number request, Born and died in 2021. W-7A Adoption taxpayer identification number request, Adoption taxpayer identification number (ATIN)., Taxpayer identification numbers for aliens. Form 1040 Estimated tax payments, Estimated Tax Gambling winnings, Form W-2G. Overpayment offset against next year's tax, Credit an Overpayment Form 1040 or 1040-SR Foreign income taxes, deduction of, Foreign income taxes. Schedule A State and local income taxes, deduction of, State and local income taxes. State benefit funds, mandatory contributions to, Contributions to state benefit funds. Taxes, deduction of, Other taxes. Schedule C Real estate or personal property taxes on property used in business, deduction of, Real estate taxes and personal property taxes. Schedule E Real estate or personal property taxes on rental property, deduction of, Real estate taxes and personal property taxes. Schedule F Real estate or personal property taxes on property used in business, deduction of, Real estate taxes and personal property taxes. Self-employment tax, deduction of, Self-employment tax. Form 1040-ES Estimated tax, How To Figure Estimated Tax, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Form 1099-K Payment card and third-party network transactions, Sharing/gig economy. Form 1099-MISC Withheld state and local taxes, Withheld taxes. Form 1099-NEC Withheld state and local taxes, Withheld taxes. Form 1099-R Withheld state and local taxes shown on, Withheld taxes. Form 1099-S Real estate transactions proceeds, Form 1099-S. Form 1116 Foreign tax credit, Foreign income taxes. Form 8332 Release of exemption to noncustodial parent, Written declaration. Form W-2 Employer-reported income statement, Withholding Filing with return, Forms W-2 and W-2G. Separate form from each employer, Form W-2 Withheld state and local taxes, Withheld taxes. Form W-2c Corrected wage and tax statement, Form Not Correct Form W-2G Gambling winnings withholding statement, Form W-2G., Form W-2G Withheld state and local taxes shown on, Withheld taxes. Form W-4 Employee withholding allowance certificate, Determining Amount of Tax Withheld Using Form W-4, New Form W-4., Who Doesn't Have To Pay Estimated Tax Form W-4S Sick pay withholding request, Form W-4S. Form W-4V, Federal Payments Unemployment compensation, voluntary withholding request, Unemployment Compensation Form(s) 1099, The 1099 Series Foster care Care providers' payments, Foster care providers. Child tax credit, Qualifying Child for the CTC Difficulty-of-care payments, Difficulty-of-care payments. Emergency foster care, maintaining space in home for, Maintaining space in home. Foster care payments and expenses, Foster care payments and expenses., Foster care. Foster child, Foster child., Foster care payments and expenses., Foster child., Foster care. Foster Grandparent Program, National Senior Services Corps programs. Found property, Found property. Fraud Penalties, Fraud., Penalties Reporting anonymously to IRS, Reminders Fringe benefits Accident and health insurance, Accident or Health Plan Accounting period, Accounting period. Adoption, employer assistance, Adoption Assistance Archer MSA contributions, Archer MSA contributions. De minimis benefits, De Minimis (Minimal) Benefits Education assistance, Educational Assistance Form W-2, Form W-2. Group-term life insurance premiums, Group-Term Life Insurance Holiday gifts, Holiday gifts. Retirement planning services, Retirement Planning Services Taxable income, Fringe Benefits Transportation, Transportation Withholding, Taxable Fringe Benefits Frozen deposits Interest on, Interest on frozen deposits. IRA rollover period extension, Extension of rollover period. Funeral expenses, Don’t Include in Total Support Funerals Clergy, payment for, Clergy Expenses, List of Nondeductible Expenses Gains and losses, Special Rules (see also Losses) Claim for refund for loss, Exceptions for special types of refunds. Gambling, Gambling Losses up to the Amount of Gambling Winnings (see Gambling winnings and losses) Hobby losses, Hobby losses. Passive activity, Rental activity losses. (see also Passive activity) Gambling winnings and losses, Gambling winnings., Gambling Losses up to the Amount of Gambling Winnings Withholding, Gambling Winnings, Form W-2G Garnishment and attachment, Garnished wages. Gas royalties, Oil, gas, and minerals. Gems IRA prohibited transactions in, Collectibles. GI Bill benefits, Tuition payments and allowances under the GI Bill. Gift taxes Not deductible, Taxes and Fees You Can’t Deduct Gifts Holiday gifts, Holiday gifts. Not taxed, Gifts and inheritances. To reduce the public debt, Gift To Reduce Debt Held by the Public Gold and silver IRA investments in, Exception. Government employees Federal (see Federal employees) Grants, disaster relief, Disaster relief grants. Gratuities (see Tip income) Gross income Age, higher filing threshold after 65, Age. Defined, Gross income. Filing requirements (Table 1-1), Dependent filing requirements (Table 1-2), Do I Have To File a Return? Gross income test, Gross Income Test Group-term life insurance Accidental death benefits, Accidental death benefits. Definition, Group-term life insurance. Exclusion from income, Entire cost excluded. Limitation on, Group-Term Life Insurance Permanent benefits, Permanent benefits. Taxable cost, calculation of, Figuring the taxable cost. Guam Income from, Individuals With Income From U.S. Possessions HAMP Home affordable modification Pay-for-performance, Home Affordable Modification Program (HAMP). Handicapped persons (see Disabilities, persons with) Head of household, Head of household or qualifying widow(er)., Head of Household Health Flexible spending arrangement, Health flexible spending arrangement (health FSA). Health insurance, Accident or Health Plan (see also Accident insurance) Reimbursement arrangement, Health reimbursement arrangement (HRA). Savings account, Health savings account (HSA). Health coverage tax credit, Who Should File Health insurance premiums, Medical insurance premiums. Health Spa, Health Spa Expenses Help (see Tax help) High income taxpayers Estimated tax, Special rules for farmers, fishermen, and higher income taxpayers. Hobbies, Hobby Expenses Activity not for profit, Activity not for profit. Losses, Hobby losses. Holiday gifts, Holiday gifts. Holiday, deadline falling on, Saturday, Sunday, holiday rule. Home Aged, home for, Home for the aged. Cost of keeping up, Keeping Up a Home Security system, Home Security System Homeowners' associations Charges, Homeowners' association charges. Hope credit Married filing separately, Special Rules Host or hostess, Host or Hostess Household furnishings Antiques (see Collectibles) Household members, Head of household or qualifying widow(er). (see also Head of household) Household workers (see Domestic help) Household workers, can’t claim as dependent, Housekeepers, maids, or servants. Housing, Keeping Up a Home (see also Home) Clergy, Clergy Cooperative (see Cooperative housing) Icons, use of, Icons., Identity theft, Reminders, Identity Theft Illegal activities Reporting of, Illegal activities. Income, Wages, Salaries, and Other Earnings, Other Income, Alimony. (see also Alimony) (see also Wages and salaries) Bartering, Bartering Canceled debts, Canceled Debts Constructive receipt of, Constructive receipt., Payment to an agent., Constructive receipt. Gross, Gross Income Test Illegal activities, Stolen property. Interest, Interest Income Jury duty pay, Jury duty. Life insurance proceeds, Life Insurance Proceeds Nonemployee compensation, Nonemployee compensation. Paid to agent, Payment to an agent. Paid to third party, Payment to third party. Partnership, Partnership Income Prepaid, Income paid in advance. Recovery, Recoveries Royalties, Royalties S corporation, S Corporation Income Tax exempt, Tax-exempt income. Underreported, Amended Returns and Claims for Refund Income taxes Federal (see Federal income tax) Foreign (see Foreign income taxes) State or local (see State or local income taxes) Income-producing expenses, Expenses You Can’t Deduct Indians Fishing rights, Indian fishing rights. Taxes collected by tribal governments, deduction of, Indian tribal government. Individual retirement arrangements (IRAs), Individual Retirement Arrangements (IRAs), Reminders, Rollovers, Roth IRAs (see also Rollovers) (see also Roth IRAs) Administrative fees, Trustees' fees., Trustees' fees., Trustee's Administrative Fees for IRA Age 59 1/2 for distribution, Age 59½ rule. Exception to rule, Exceptions. Age 72 Distributions required at, IRA owners., Excess Accumulations (Insufficient Distributions) Compensation, defined, What is compensation? Contribution limits, How Much Can Be Contributed?, General limit. Age 50 or older,, General limit. Under age 50,, General limit. Contributions, Special Rules, Individual retirement arrangements (IRAs). Designating year for which contribution is made, Designating year for which contribution is made. Excess, Excess Contributions Filing before contribution is made, Filing before a contribution is made. Nondeductible, Nondeductible Contributions Not required annually, Contributions not required. Roth IRA contribution for same year, Roth IRAs and traditional IRAs. Time of, When Can Contributions Be Made? Withdrawal before filing due date, Contributions returned before the due date of return. Cost basis, Cost basis., Partly taxable. Deduction for, How Much Can You Deduct? Phaseout, Deduction phaseout. Definition of, Traditional IRAs Distributions At age 59 1/2, Age 59½ rule., Exceptions. Required minimum distributions (see this heading: Required distributions) (see this heading: Required distributions) Divorced taxpayers, Transfers Incident to Divorce Early distributions (see Early withdrawal from deferred interest account) Employer retirement plan participants, Covered by an employer retirement plan., Limit if Covered by Employer Plan Establishing account, Who Can Open a Traditional IRA? Time of, When and How Can a Traditional IRA Be Opened? Where to open account, When and How Can a Traditional IRA Be Opened? Excess contributions, Excess Contributions Forms to use Form 1099-R for reporting distributions, Distributions reported on Form 1099-R. Form 8606 for nondeductible contributions, Reminders Inherited IRAs, Inherited pension or individual retirement arrangement (IRA)., Inherited IRAs, Inherited IRAs. Required distributions, Beneficiaries. Interest on, treatment of, Reminders Kay Bailey Hutchison Spousal IRAs, Kay Bailey Hutchison Spousal IRA limit., Kay Bailey Hutchison Spousal IRA., If your spouse is covered. Married couples (see this heading: Kay Bailey Hutchison Spousal IRAs) Modified adjusted gross income (MAGI) Computation of, Modified adjusted gross income (AGI). Nondeductible contributions, Nondeductible Contributions Early withdrawal, Nondeductible contributions. Tax on earnings on, Tax on earnings on nondeductible contributions. Ordinary income, distributions as, Ordinary income. Penalties, What Acts Result in Penalties or Additional Taxes? Early distributions (see Early withdrawal from deferred interest account) Excess contributions, Excess Contributions Form 8606 not filed for nondeductible contributions, Reminders, Penalty for failure to file Form 8606. Overstatement of nondeductible contributions, Penalty for overstatement. Prohibited transactions, Effect on an IRA account. Required distributions, failure to take, When Must You Withdraw IRA Assets? (Required Minimum Distributions), Excess Accumulations (Insufficient Distributions) Prohibited transactions, Prohibited Transactions Recharacterization of contribution, Recharacterizations Reporting of Distributions, Reporting taxable distributions on your return. Recharacterization of contributions, Reporting a recharacterization. Required distributions, Required distributions., When Must You Withdraw IRA Assets? (Required Minimum Distributions) Excess accumulations, Excess Accumulations (Insufficient Distributions) Retirement savings contribution credit, Special Rules Self-employed persons, Self-employment income. Taxability, Exceptions. Distributions, Are Distributions Taxable? Time of taxation, Traditional IRAs Transfers permitted, Can You Move Retirement Plan Assets? To Roth IRAs, Transfers to Roth IRAs., Converting From Any Traditional IRA to a Roth IRA Trustee administrative fees, Trustee's Administrative Fees for IRA Trustee-to-trustee transfers, Trustee-to-Trustee Transfer IRA to Roth IRA, Conversion methods. Types of, Kinds of traditional IRAs. Withdrawals, When Can You Withdraw or Use IRA Assets?, How to treat withdrawn contributions. Early (see Early withdrawal from deferred interest account) Required (see this heading: Required distributions) Withholding, Form W-2., Pensions and Annuities, Withholding. Individual taxpayer identification number (ITIN), Individual taxpayer identification number (ITIN)., Born and died in 2021. Individual taxpayers (see Single taxpayers) Information returns, Form W-2., Form 1099., Form W-2., Back pay awards., Accrued leave payment., Stock you elected to include in income. (see also Form 1099) (see also Form W-2) Partnerships to provide, Schedule K-1 (Form 1065). Inheritance, Estate and trust income. (see also Estate beneficiaries) IRAs (see Individual retirement arrangements (IRAs)) Not taxed, Gifts and inheritances. Inheritance tax Deductibility of, Taxes and Fees You Can’t Deduct Deduction, Taxes and Fees You Can’t Deduct Injured spouse, Joint return and injured spouse. Claim for refund, Joint return and injured spouse. Innocent spouse relief Form 8857, Relief from joint responsibility. Joint returns, Relief from joint responsibility. Insolvency Canceled debt not deemed to be income, Excluded debt. Installment agreements, Installment Agreement Insurance Accident (see Accident insurance) Life, Pensions and Annuities, Group-term life insurance. (see also Group-term life insurance) (see also Life insurance) Reimbursements From casualty insurance, Casualty insurance and other reimbursements. Insurance companies State delinquency proceedings, IRA distributions not made due to, Exemption from tax. Insurance premiums Life, Don’t Include in Total Support, Life Insurance Premiums Medical, Medical insurance premiums. Paid in advance, Prepaid insurance premiums. Insurance proceeds Dividends, interest on, Interest on insurance dividends. Installment payments, Insurance Life, Insurance Interest Fees to collect, Fees To Collect Interest and Dividends Frozen deposits, Interest income on frozen deposits. Usurious, Usurious interest. Interest income, Interest Income Form 1099-INT, Form 1099. Frozen deposits, from, Interest on frozen deposits. Recovery of income, on, Interest on recovery. Savings bonds, Interest on qualified savings bonds. (see also U.S. savings bonds) Tax refunds, from, Interest on erroneous refund. Interest payments, Mortgage interest refund. (see also Mortgages) Canceled debt including, Interest included in canceled debt. Student loans deduction, Special Rules Interference with business operations Damages as income, Court awards and damages. Internal Revenue Service (IRS) Fraud or misconduct of employee, reporting anonymously, Reminders International employment (see Foreign employment) International organizations, employees of, Employees of international organizations or foreign governments. Internet Electronic filing over (see E-file) Investments Fees, Investment Fees and Expenses Seminars, Investment-Related Seminars IRAs (see Individual retirement arrangements (IRAs)) Itemized deductions Changing from standard to itemized deduction (or vice versa), Changing your mind. Choosing to itemize, Who Should Itemize, When to itemize. Form 1040 to be used, Where to report. Married filing separately, Special Rules, Married persons who filed separate returns. One spouse has itemized, Persons not eligible for the standard deduction. Recovery, Itemized Deduction Recoveries Standard deduction to be compared with, Who Should Itemize State tax, for, Electing to itemize for state tax or other purposes. ITIN (see Individual taxpayer identification number (ITIN)) ITINs (see Individual taxpayer identification number (ITIN)) Job search Deduction of expenses for Interviews, Job interview expenses. Joint accounts, Joint accounts. Joint return test, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Joint returns Accounting period, Accounting period. After separate return, Joint Return After Separate Returns Deceased spouse, Spouse died. Dependents on, Joint return. Divorced taxpayers, Divorced persons., Divorced taxpayer. Estimated tax, Married taxpayers. Extension for citizens outside U.S., Married taxpayers. Filing status, Married Filing Jointly Fraud penalty, Joint return. Guardian of spouse, signing as, Signing as guardian of spouse. Injured spouse, Joint return and injured spouse. Innocent spouse, Relief from joint responsibility. Nonresident or dual-status alien spouse, Nonresident alien or dual-status alien. Responsibility for, Accounting period. Separate return after joint, Separate Returns After Joint Return Signing, Spouse unable to sign., Signing a joint return. Social security and railroad retirement benefits, Joint return. State and local income taxes, deduction of, Joint federal return. Judges, federal Employer retirement plan coverage, Federal judges. Jury duty pay, Jury duty. Labor unions, Union agreements. Dues and fees, Union benefits and dues. Sick pay withholding under union agreements, Union agreements. Strike and lockout benefits, Strike and lockout benefits. Unemployment compensation payments from, Payments by a union. Late filing, Reminders Penalties, Filing late., Filing late., Return over 60 days late. Late payment Penalties on tax payments, Paying tax late. Law enforcement officers Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Legal expenses, Legal Expenses, Personal Legal Expenses Liability insurance Reimbursements from, Casualty insurance and other reimbursements. License fees Deductibility of, Taxes and Fees You Can’t Deduct Nondeductibility of, List of Nondeductible Expenses Life insurance, Group-term life insurance., Accelerated Death Benefits (see also Accelerated death benefits) (see also Group-term life insurance) Form 1099-R for surrender of policy for cash, Surrender of policy for cash. Premiums, Life Insurance Premiums Proceeds, Insurance As income, Life Insurance Proceeds Public safety officers who died or were killed in line of duty, tax exclusion, Public Safety Officer Killed or Injured in the Line of Duty Surrender of policy for cash, Surrender of policy for cash. Withholding, Pensions and Annuities Life insurance premiums, Don’t Include in Total Support Lifetime learning credit Married filing separately, Special Rules Limits Miscellaneous deductions, Miscellaneous Itemized Deductions Loans, Exceptions for special types of refunds. (see also Debts) Lobbying expenses, Lobbying Expenses Local assessments Deductibility of, Taxes for local benefits. Local income taxes, itemized deductions, Electing to itemize for state tax or other purposes. Local law violated, Local law violated. Lockout benefits, Strike and lockout benefits. Lodging, Lodging. Long-term care insurance contracts, Long-Term Care Insurance Contracts Chronically ill individual, Chronically ill individual., Exclusion for chronic illness. Exclusion, limit of, Limit on exclusion. Qualified services defined, Qualified long-term care services. Losses, Exceptions for special types of refunds., Rental activity losses. (see also Gains and losses) Capital, Special Rules Casualty, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Gambling (see Gambling winnings and losses) Theft, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Lost property, Lost or Mislaid Cash or Property Lotteries and raffles, Gambling winnings., Lotteries and raffles. (see also Gambling winnings and losses) Mailing addresses, Where To File Mailing returns (see Tax returns) Married dependents, filing joint return, Joint Return Test, Joint Return Test (To Be a Qualifying Child) Married filing separately, Married Filing Separately Community property states, Community property states. Credits, treatment of, Special Rules Deductions Changing method from or to itemized deductions, Married persons who filed separate returns. Treatment of, Special Rules Earned income credit, Special Rules How to file, How to file. Itemized deductions, Special Rules, Married persons who filed separate returns. One spouse has itemized so other must as well, Persons not eligible for the standard deduction. Joint state and local income taxes filed, but separate federal returns, Joint state and local returns. Rollovers, Special Rules Social security and railroad retirement benefits, Benefits not taxable. State and local income taxes, Separate federal returns. Tenants by the entirety, allocation of real estate taxes, Tenants by the entirety. Married taxpayers, Married Filing Jointly, Accounting period., Married Filing Separately, Considered Unmarried (see also Joint returns) (see also Married filing separately) Age 65 or older spouse Standard deduction, Spouse 65 or Older or Blind Blind spouse Standard deduction, Spouse 65 or Older or Blind Deceased spouse, , Surviving Spouses, Executors, Administrators, and Legal Representatives, Head of household or qualifying widow(er)., Spouse died during the year., Spouse died. (see also Surviving spouse) Dual-status alien spouse, Nonresident alien or dual-status alien. Estimated tax, Married taxpayers., 2021 separate returns and 2022 joint return. Filing status, , Filing status., Married persons. IRAs, Kay Bailey Hutchison Spousal IRA limit., Kay Bailey Hutchison Spousal IRA. Spouse covered by employer plan, How Much Can You Deduct?, If your spouse is covered. Living apart, Married persons living apart. Nonresident alien spouse, Nonresident alien spouse., Nonresident alien or dual-status alien. Roth IRAs, Can you contribute to a Roth IRA for your spouse? Signatures when spouse unable to sign, Spouse unable to sign. Social security or railroad retirement benefits, taxability, Figuring total income. Mass transit passes, employer-provided, Transit pass. Maximum age. The age restriction for contributions to a traditional IRA has been eliminated. Traditional IRA contributions, Reminders Medical and dental expenses Reimbursements, treatment of, Reimbursement for medical care. Medical insurance (see Accident insurance) Medical insurance premiums, Medical insurance premiums. Medical savings accounts (MSAs), Archer MSA contributions., Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). (see also Archer MSAs) Medicare Advantage MSA, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Medicare, Social security and Medicare taxes paid by employer., Social security and Medicare taxes. (see also Social security and Medicare taxes) Benefits, Medicare. Medicare Advantage MSA (see Medical savings accounts (MSAs)) Medicare taxes, not support, Don’t Include in Total Support Member of household or relationship test, Member of Household or Relationship Test Mentally incompetent persons, Disability Pensions (see also Disabilities, persons with) Signing of return by court-appointed representative, Court-appointed conservator, guardian, or other fiduciary. Mexico Resident of, Citizen or Resident Test, Child in Canada or Mexico. Military (see Armed forces) (see Armed Forces) Mineral royalties, Oil, gas, and minerals. Ministers (see Clergy) Miscellaneous deductions, Other Itemized Deductions Missing children Photographs of, included in IRS publications, Reminders Mistakes (see Errors) Modified adjusted gross income (MAGI) Roth IRAs, computation for, Modified AGI. Phaseout (Table 9-3), Contributions not reported. Worksheet 9-2, More information. Money market certificates, Certificates of deposit and other deferred interest accounts. Mortgage Relief, Mortgage relief upon sale or other disposition. Mortgages Assistance payments, Mortgage assistance payments under section 235 of the National Housing Act. Discounted mortgage loan, Discounted mortgage loan. Interest Refund of, Mortgage interest refund. MSAs (see Medical savings accounts (MSAs)) Multiple support agreement, Multiple Support Agreement Municipal bonds, State or Local Government Obligations Mutual funds Nonpublicly offered, Nonpublicly offered mutual funds. Name change, Name change., Name changed. National Housing Act Mortgage assistance, Mortgage assistance payments under section 235 of the National Housing Act. National of the United States, U.S. national. Native Americans (see Indians) Negligence penalties, Negligence or disregard. Net operating losses Refund of carryback, Exceptions for special types of refunds. New Jersey Nonoccupational Disability Benefit Fund, Contributions to state benefit funds. New Jersey Unemployment Compensation Fund, Contributions to state benefit funds. New York Nonoccupational Disability Benefit Fund, Contributions to state benefit funds. Nobel Prize, Pulitzer, Nobel, and similar prizes. Nominees, Nominees., Nominee. Nonemployee compensation, Nonemployee compensation. Nonresident aliens, Nonresident alien. Due dates, Nonresident alien. Estimated tax, Aliens. Individual taxpayer identification number (ITIN), Nonresident alien spouse. Spouse, Nonresident alien spouse. Joint returns not available, Nonresident alien or dual-status alien. Separated, Nonresident alien spouse. Standard deduction, Persons not eligible for the standard deduction. Taxpayer identification number, Taxpayer identification numbers for aliens. Waiver of alien status, Waiver of alien status. Northern Mariana Islands Income from, Individuals With Income From U.S. Possessions Not-for-profit activities, Activity not for profit. Notary fees, Notary public. Notes Discounted, Note received for services., Original Issue Discount (OID) Received for services, Note received for services. Nursing homes Insurance for care in (see Long-term care insurance contracts) Nutrition Program for the Elderly, Nutrition Program for the Elderly. OASDI, Social security benefits (including lump-sum payments attributable to prior years), Supplemental Security Income (SSI) benefits, and lump-sum death benefits. Office rent, deductibility of, Clerical Help and Office Rent Offset against debts, Refunds., Offset against debts. Oil, gas, and minerals Future production sold, Part of future production sold. Royalties from, Oil, gas, and minerals. Schedule C or C-EZ, Royalties Sale of property interest, Sale of property interest. Options, Stock Options Ordinary gain and loss (see Gains and losses) Original issue discount (OID), Original Issue Discount (OID) Other taxes, Other taxes. Outplacement services, Outplacement services. Overpayment of tax, Refunds (see also Tax refunds) Overseas work (see Foreign employment) Overtime pay, Supplemental Wages Paper vs. electronic return (see E-file) Paperwork Reduction Act of 1980, Reminders Parental responsibility (see Children) Parents who never married, Parents who never married. Parents, divorced or separated, Children of divorced or separated parents (or parents who live apart). Parking fees Employer-provided fringe benefit Exclusion from income, Transportation Partners and partnerships, Indirect Deductions of Pass-Through Entities Income, Partnership Income Pass-through entities, Indirect Deductions of Pass-Through Entities Passive activity Losses, Rental activity losses. Patents Infringement damages, Court awards and damages. Royalties, Copyrights and patents. Payment of estimated tax, How To Pay Estimated Tax By check or money order, How To Pay Estimated Tax Credit an overpayment, How To Pay Estimated Tax Payment of tax, Reminders, Amount you owe., Amount You Owe, Installment Agreement, Tax paid., Pay by Check or Money Order Using the Estimated Tax Payment Voucher By credit or debit card, E-file and pay by credit or debit card or by direct transfer from your bank account. Delivery services, Private delivery services. Estimated tax, Estimated tax payments. Installment agreements (see Installment agreements) Late payment penalties, Paying tax late. Payments, Payments., Payments. Disaster relief, Disaster relief payments. Payroll deductions, Taxes and Fees You Can’t Deduct Payroll taxes, Social security and Medicare taxes paid by employer. (see also Social security and Medicare taxes) Peace Corps allowances, Peace Corps. Penalties, Underpayment penalty., Underpayment Penalty for 2021 Accuracy-related, Accuracy-related penalty. Backup withholding, Penalties. Civil penalties, Civil Penalties Criminal, Criminal Penalties Deductibility, Fines and Penalties Defenses, Adequate disclosure. Estimated tax (see this heading: Underpayment of estimated tax) Failure to include social security number, Penalty for not providing social security number., Failure to supply SSN. Failure to pay tax, Paying tax late. Form 8606 not filed for nondeductible IRA contributions, Reminders, Penalty for failure to file Form 8606. Fraud, Fraud., Fraud., Criminal Penalties Frivolous tax submission, Frivolous tax submission. Interest on, Interest on penalties. IRAs, What Acts Result in Penalties or Additional Taxes? Early distributions, Early Distributions Excess contributions, Excess Contributions Form 8606 not filed for nondeductible contributions, Reminders, Penalty for failure to file Form 8606. Overstatement of nondeductible contributions, Penalty for overstatement. Required distributions, failure to take, When Must You Withdraw IRA Assets? (Required Minimum Distributions) Late filing, Filing late., Filing late., Return over 60 days late. Exception, Exception. Late payment, Paying tax late. Negligence, Negligence or disregard. Reportable transaction understatements, Substantial understatement of income tax. Roth IRAs Conversion contributions withdrawn in 5-year period, Additional tax on distributions of conversion and certain rollover contributions within 5-year period. Excess contributions, What if You Contribute Too Much? Substantial understatement of income tax, Substantial understatement of income tax. Tax evasion, Criminal Penalties Underpayment of estimated tax, , Underpayment penalty., Underpayment Penalty for 2021 Willful failure to file, Criminal Penalties Withholding, Penalties, Penalties. Pennsylvania Unemployment Compensation Fund, Contributions to state benefit funds. Pensions, Military retirees., Social Security and Equivalent Railroad Retirement Benefits (see also Railroad retirement benefits) Clergy, Pension. Contributions Retirement savings contribution credit, Special Rules Taxation of, Retirement Plan Contributions Decedent's unrecovered investment in, Form W-2. Disability pensions, Sickness and Injury Benefits Elective deferral limitation, Elective deferrals. Employer plans Benefits from previous employer's plan, Benefits from a previous employer's plan. Rollover to IRA, Rollover From Employer's Plan Into an IRA, Rollover from a qualified retirement plan into a Roth IRA. Situations in which no coverage, Situations in Which You Aren’t Covered Inherited pensions, Inherited pension or individual retirement arrangement (IRA). Military (see Armed Forces) Unrecovered investment in, Unrecovered Investment in Annuity Withholding, Form W-2., Pensions and Annuities Per capita taxes Deductibility of, Taxes and Fees You Can’t Deduct Personal exemption, Taxpayer identification numbers for aliens. Personal injury suits Damages from, Court awards and damages. Personal property Rental income from, Rents From Personal Property Personal property taxes Deduction of, Personal Property Taxes Schedule A, C, E, or F (Form 1040), Real estate taxes and personal property taxes. Taxes (see Personal property taxes) Personal representatives (see Fiduciaries) Persons with disabilities (see Disabilities, persons with) Place for filing, Where Do I File? Political campaign expenses, Campaign Expenses, Political Contributions Political contributions (see Campaign contributions) Power of attorney, Power of attorney., Power of attorney. Premature distributions (see Early withdrawal from deferred interest account) Prepaid Insurance, Prepaid insurance premiums. Preparers of tax returns, Paid Preparer Presidential Election Campaign Fund, Presidential Election Campaign Fund Price reduced after purchase, Price reduced after purchase. Principal residence (see Home) Privacy Act and paperwork reduction information, Reminders Private delivery services, Private delivery services. Prizes and awards, Bonuses and awards., Prizes and awards., Employee awards or bonuses. (see also Bonuses) Exclusion from income, Employee achievement award. Pulitzer, Nobel, and similar prizes, Pulitzer, Nobel, and similar prizes. Scholarship prizes, Prizes. Professional license fees, Professional Accreditation Fees Professional Reputation, Professional Reputation Profit-sharing plans Withholding, Form W-2., Pensions and Annuities Property Found, Found property. Stolen, Stolen property. Public assistance benefits, Welfare and Other Public Assistance Benefits Public debt Gifts to reduce, Gift To Reduce Debt Held by the Public Public transportation passes, employer-provided, Transit pass. Publications (see Tax help) Puerto Rico Residents of, Residents of Puerto Rico Pulitzer Prize, Pulitzer, Nobel, and similar prizes. Punitive damages As income, Court awards and damages. Raffles, Lotteries and raffles. Railroad retirement benefits, Social Security and Equivalent Railroad Retirement Benefits, Deduction more than $3,000., Railroad retirement annuities. Deductions related to, Deductions Related to Your Benefits Employer retirement plans different from, Social security or railroad retirement. Equivalent tier 1 (social security equivalent benefit (SSEB)), , Railroad retirement annuities. Estimated tax, Tax withholding and estimated tax. Form RRB-1042S for nonresident aliens, What isn’t covered in this chapter. Form RRB-1099, Joint returns, Joint return. Lump-sum election, Lump-sum election. Married filing separately, Special Rules, Benefits not taxable. Repayment of benefits, Repayment of benefits. Reporting of, How To Report Your Benefits Taxability of, Are Any of Your Benefits Taxable?, How Much Is Taxable? Withholding, Federal Payments Not tax deductible, Taxes and Fees You Can’t Deduct Withholding for, Tax withholding and estimated tax. Railroad Unemployment Insurance Act, Railroad sick pay. Real estate Canceled business debt, treatment of, Excluded debt. Division of real estate taxes, Division of real estate taxes between buyers and sellers. Form 1099-S to report sale proceeds, Form 1099-S. Itemized charges for services not deductible, Itemized charges for services. Real estate-related items not deductible, Real Estate-Related Items You Can’t Deduct Transfer taxes, Transfer taxes (or stamp taxes). Real estate taxes Assessments (see Local assessments) Cooperative housing, Tenant-shareholders in a cooperative housing corporation. (see Cooperative housing) deduction of, State and Local Real Estate Taxes Deduction of Schedule A, C, E, or F (Form 1040), Real estate taxes and personal property taxes. Refund, treatment of, Refund (or rebate). Rebates (see Refunds) Recharacterization IRA contributions, Recharacterizations Recordkeeping Gambling, Gambling Losses up to the Amount of Gambling Winnings Savings bonds used for education, Education Savings Bond Program Recordkeeping requirements, What Records Should I Keep? Basic records, Basic Records Copies of returns, Copies of tax returns. Electronic records, Electronic records. Gambling, Gambling winnings. Period of retention, How Long To Keep Records Proof of payments, Proof of Payment Why keep records, Why Keep Records? Recovery of amounts previously deducted, Recoveries Itemized deductions, Itemized Deduction Recoveries Mortgage interest refund, Mortgage interest refund. Over multiple years, Recovery for 2 or more years. Tax refunds, Federal income tax refund. Refunds, Refund or balance due. State tax, State tax refund. Taxes (see Tax refunds) Rehabilitative program payments, Veterans' benefits. Reimbursement, Recoveries (see also Recovery of amounts previously deducted) Employee business expenses, Allowances and reimbursements. Relationship test, Relationship Test, Member of Household or Relationship Test Relative, qualifying, Qualifying Relative Relief fund contributions, Relief Fund Contributions Religious organizations, Ministers., Clergy, Pension. (see also Clergy) Rental income and expenses Increase due to higher real estate taxes, Rent increase due to higher real estate taxes. Losses from rental real estate activities, Rental activity losses. Personal property rental, Rents From Personal Property Repayments, Repayments Amount previously included in income, Repayments Under Claim of Right Railroad retirement benefits, Repayment of benefits. Social security benefits, Repayment of benefits., Repaid social security benefits. Unemployment compensation, Repayment of unemployment compensation., Repayment of benefits. Reporting Rollovers, Reporting rollovers from employer plans. Required minimum distributions, Required distributions., When Must You Withdraw IRA Assets? (Required Minimum Distributions) (see also Individual retirement arrangements (IRAs)) Required minimum distributions (RMDs), Reminders Rescue squad members Life insurance proceeds when death in line of duty, Public Safety Officer Killed or Injured in the Line of Duty Reservists IRAs, Reservists. Repayments, Qualified reservist repayments. Residency Home outside U.S. (see Citizens outside U.S.) Residency test, Residency Test Resident aliens Estimated tax, Aliens. IRA distributions, withholding from, IRA distributions delivered outside the United States. Social security number (SSN), No SSN. Spouse treated as, Choice to treat spouse as resident. Retired Senior Volunteer Program, National Senior Services Corps programs. Retirees Armed Forces Taxable income, Military retirement pay. Retirement planning services, Retirement Planning Services Retirement plans, Special Rules, Military retirees., Social Security and Equivalent Railroad Retirement Benefits (see also Railroad retirement benefits) (see also Roth IRAs) Clergy, Pension. Contributions, Retirement Plan Contributions Credit for (see Retirement savings contribution credit) Taxation of, Retirement Plan Contributions Decedent's unrecovered investment in, Form W-2. Disability pensions, Sickness and Injury Benefits Elective deferral limitation, Elective deferrals. Employer plans Benefits from previous employer's plan, Benefits from a previous employer's plan. Rollover to IRA, Rollover From Employer's Plan Into an IRA, Rollover from a qualified retirement plan into a Roth IRA. Situations in which no coverage, Situations in Which You Aren’t Covered Inherited pensions, Inherited pension or individual retirement arrangement (IRA). IRAs (see Individual retirement arrangements (IRAs)) Military (see Armed Forces) Withholding, Form W-2., Pensions and Annuities Retirement savings contribution credit Adjusted gross income limit, Special Rules Returns, tax (see Tax returns) Rewards, Rewards. Rhode Island Temporary Disability Benefit Fund, Contributions to state benefit funds. Rollovers, Rollovers Definition of, Rollovers Excess due to incorrect rollover information, Excess due to incorrect rollover information. From 403 plan to IRA, Kinds of rollovers to a traditional IRA. From employer's plan to IRA, Kinds of rollovers to a traditional IRA., Rollover From Employer's Plan Into an IRA From IRA to IRA, Kinds of rollovers to a traditional IRA., Rollover From One IRA Into Another From IRA to Roth IRA, Conversion methods. From Roth IRA to Roth IRA, Rollover From a Roth IRA From section 457 plan to IRA, Kinds of rollovers to a traditional IRA. From SIMPLE IRA to Roth IRA, Converting from a SIMPLE IRA. Inherited IRAs, Inherited IRAs. Married filing separately, Special Rules Partial rollovers, Partial rollovers. Reporting From employer's plan to IRA, Reporting rollovers from employer plans. IRA to IRA, Reporting rollovers from IRAs. Taxability, Rollovers, Form 5329 not required. Time limits (60-day rule), Time limit for making a rollover contribution., Rollovers Treatment of, Treatment of rollovers. Waiting period between, Waiting period between rollovers. Roth IRAs, Roth IRAs, Rollover From a Roth IRA, More information. (see also Rollovers) Age Distributions after age 59 1/2, What are qualified distributions? No limit for contributions, Is there an age limit for contributions? No required distribution age, Must you withdraw or use Roth IRA assets? Compensation, defined, Compensation. Contribution limits, How Much Can Be Contributed? Age 50 or older,, Roth IRAs and traditional IRAs. Under age 50,, Roth IRAs and traditional IRAs. Contributions, Can You Contribute to a Roth IRA? No deduction for, What Is a Roth IRA? Roth IRA only, Roth IRAs only. Time to make, When Can You Make Contributions? To traditional IRA for same year, Roth IRAs and traditional IRAs. Conversion, Conversions Definition of, What Is a Roth IRA? Distributions Qualified distributions, What are qualified distributions? Effect of modified AGI on contributions (Table 9-3), Contributions not reported. Establishing account, When Can a Roth IRA Be Opened? Excess contributions, What if You Contribute Too Much? IRA transfer to, Transfers to Roth IRAs., Converting From Any Traditional IRA to a Roth IRA Modified adjusted gross income (MAGI), Modified AGI. Computation (Worksheet 9-2), More information. Phaseout (Table 9-3), Contributions not reported. Penalties Conversion contributions withdrawn in 5-year period, Additional tax on distributions of conversion and certain rollover contributions within 5-year period. Excess contributions, What if You Contribute Too Much? Recharacterizations, Recharacterizations Spousal contributions, Can you contribute to a Roth IRA for your spouse? Taxability, Are Distributions Taxable? Withdrawals, Must you withdraw or use Roth IRA assets? Excess contributions, Withdrawal of excess contributions. Not taxable, Are Distributions Taxable? Rounding off dollars, Rounding off dollars. Royalties, Royalties S corporations, Indirect Deductions of Pass-Through Entities Shareholders, S Corporation Income Safe deposit box, Safe Deposit Box Rent, Tax Preparation Fees Salaries (see Wages and salaries) Sale of home, Sale of home. Division of real estate taxes, Division of real estate taxes between buyers and sellers. Sale of property Personal items, Sale of personal items. Sales and exchanges Bonds, Bonds Sold Between Interest Dates Saturday, deadline falling on, Saturday, Sunday, holiday rule. Savings Bonds, U.S. Savings Bonds, U.S. savings bond interest previously reported. Bonds used for education, Education Savings Bond Program Certificate, Certificates of deposit and other deferred interest accounts., Certificates of deposit (CDs). Schedule, Gift To Reduce Debt Held by the Public, Childcare providers., Housing., Railroad sick pay. (see also Form 1040) (see also Form 1040 or 1040-SR) Form 1040, A-F, R, SE (see Form 1040) K-1 Partnership income, Schedule K-1 (Form 1065). S corporation income, Schedule K-1 (Form 1120-S). K-1, Form 1041, Beneficiary of an estate or trust. Schedule A (Form 1040) Itemized deductions, When to itemize. Schedules A–F, R, SE (Form 1040) (see Form 1040) Scholarships, Scholarships., Gross income defined., Don’t Include in Total Support Scholarships and fellowships Earned income including, Earned income defined. Exclusion from gross income, Scholarships and fellowships. Teaching or research fellowships, Payment for services. Section 457 deferred compensation plans Rollovers To IRAs, Rollover From Employer's Plan Into an IRA, Rollover from a qualified retirement plan into a Roth IRA. Securities Claim for refund, Exceptions for special types of refunds. Options, Stock Options Stock appreciation rights, Stock appreciation rights. Self-employed persons, Self-employment tax. (see also Self-employment tax) Corporate directors as, Corporate director. Definition, Self-Employed Persons Foreign government or international organizations, U.S. citizens employed by, Employees of foreign governments or international organizations. Gross income, Self-employed individuals. IRAs, Self-employment income. Ministers, Ministers. Nonemployee compensation, Nonemployee compensation. Self-employment tax Deduction of, Self-employment tax. Seminars Investment-related, Investment-Related Seminars Senior Companion Program, National Senior Services Corps programs. Separate returns (see Married filing separately) Separated parents, Children of divorced or separated parents (or parents who live apart)., Applying the tiebreaker rules to divorced or separated parents (or parents who live apart). Separated taxpayers, Married persons living apart. Filing status, Married Filing Separately, Considered Unmarried IRAs, Kay Bailey Hutchison Spousal IRA. Nonresident alien spouse, Nonresident alien spouse. SEPs (see Simplified employee pensions (SEPs)) Series EE and E savings bonds, Series EE and Series I bonds. Series HH and H savings bonds, Series H and HH bonds. Series I savings bonds, Series EE and Series I bonds. Service charges, Service Charges on Dividend Reinvestment Plans Service Corps of Retired Executives (SCORE), Service Corps of Retired Executives (SCORE). Severance pay, Severance pay. Accrued leave payment, Accrued leave payment. Outplacement services, Outplacement services. Short tax year Change in annual accounting period, Persons not eligible for the standard deduction. Sick pay Collective bargaining agreements, Sick Pay FECA payments, Federal Employees' Compensation Act (FECA). Income, Sick pay. Railroad Unemployment Insurance Act, Railroad sick pay. Withholding, Supplemental Wages, Sick Pay Signatures, Signatures Agent, use of, When someone can sign for you. Joint returns, Signing a joint return. Mentally incompetent, Court-appointed conservator, guardian, or other fiduciary. Parent for child, Spouse unable to sign. Physically disabled, Court-appointed conservator, guardian, or other fiduciary. Signing your return, Form 8453. Silver (see Gold and silver) SIMPLE plans Rollover to Roth IRA, Converting from a SIMPLE IRA. Simplified employee pensions (SEPs) IRAs as, Kinds of traditional IRAs. Single taxpayers, Widow(er). Filing requirements, Individuals—In General Filing status, Filing status., Unmarried persons., Single Gross income filing requirements (Table 1-1), Social security and Medicare taxes Support, not included in, Don’t Include in Total Support Social security benefits, Social security benefits., Social Security and Equivalent Railroad Retirement Benefits, Deduction more than $3,000. Deductions related to, Deductions Related to Your Benefits Employer retirement plans different from, Social security or railroad retirement. Estimated tax, Tax withholding and estimated tax. Foreign employer, Social security and Medicare taxes. Form SSA-1042S for nonresident aliens, What isn’t covered in this chapter. Form SSA-1099, IRAs for recipients of benefits, Social security recipients. Joint returns, Joint return. Lump-sum election, Lump-sum election. Married filing separately, Special Rules, Benefits not taxable. Paid by employer, Social security and Medicare taxes paid by employer. Repayment of benefits, Repayment of benefits., Repaid social security benefits. Repayments, Repayments of Social Security Benefits Reporting of, How To Report Your Benefits Taxability of, Are Any of Your Benefits Taxable?, How Much Is Taxable? Withholding, Federal Payments Withholding for, Tax withholding and estimated tax. Not deductible, Taxes and Fees You Can’t Deduct Social security number (SSN), Social Security Number (SSN) Child's, Reminders Number to be obtained at birth, Born and died in 2021. Correspondence with IRS, include SSN, SSN on correspondence. Dependents, Reminders, Dependent's SSN. Exception, Exception. Failure to include penalty, Penalty for not providing social security number. Form SS-5 to request number, No SSN. Nonresident alien spouse, Nonresident alien spouse. Resident aliens, No SSN. Spouse, Surviving Spouses, Executors, Administrators, and Legal Representatives, Nonresident alien spouse., Spouse unable to sign., Head of household or qualifying widow(er)., Spouse died during the year., Spouse died., Nonresident alien or dual-status alien., Surviving spouse. (see also Married taxpayers) (see also Married taxpayers) (see also Surviving spouse) Spouse's death, Death of a spouse. SSN (see Social security number (SSN)) Stamp taxes Real estate transactions and, Transfer taxes (or stamp taxes). Stamps (see Collectibles) Standard deduction, Standard Deduction, Persons not eligible for the standard deduction., Decedent's final return., Higher Standard Deduction for Age (65 or Older), Married persons who filed separate returns. State Obligations, interest on, State or Local Government Obligations State or local governments Employees Unemployment compensation, State employees. State or local income taxes, Electing to itemize for state tax or other purposes. Deduction of, State or local taxes., State and Local Income Taxes Schedule A (Form 1040), State and local income taxes. Electronic returns filed with federal, State returns. Exception to deduction, Exception. Federal changes, effect on, Effect on state tax liability. Form W-2 to show withheld taxes, Withheld taxes. Joint state and local returns but federal returns filed separately, Joint state and local returns. Married filing separately, Separate federal returns. Refunds, treatment of, Refund applied to taxes., Refund (or credit) of state or local income taxes. State or local taxes Refunds, State tax refund. Statute of limitations Claim for refund, Joint return and injured spouse. Claim for refunds, Time for filing a claim for refund. Stillborn child, Stillborn child. Stock appreciation rights, Stock appreciation rights. Stock bonus plans, Pensions and Annuities Stock options, Stock Options Stockholders, Exceptions for special types of refunds. (see also Securities) Debts, Stockholder debt. Stockholders' meeting expenses, Stockholders' Meetings Stocks, Exceptions for special types of refunds. (see also Securities) Stolen funds Reporting of, Stolen property. Stolen property, Stolen property. Strike benefits, Strike and lockout benefits. Student loans Cancellation of debt, Student loans. Interest deduction Married filing separately, Special Rules Students Defined, Student defined. Exemption from withholding, Students. Foreign, Foreign students' place of residence. Loans (see Student loans) Scholarships (see Scholarships and fellowships) Tuition programs, qualified (see Qualified tuition programs) Substitute forms, Substitute tax forms. Sunday, deadline falling on, Saturday, Sunday, holiday rule. Supplemental wages, Supplemental Wages Support test Qualifying child, Support Test (To Be a Qualifying Child) Qualifying relative, Support Test (To Be a Qualifying Relative) Surviving spouse Filing status, Head of household or qualifying widow(er). With dependent child, Qualifying Widow(er) Gross income filing requirements (Table 1-1), Life insurance proceeds paid to, Surviving spouse. Single filing status, Widow(er). Tax (see Estate tax) Tables and figures Estimated tax, who must make payments (Figure 4-A), How To Figure Estimated Tax Filing requirements Dependents (Table 1-2), Do I Have To File a Return? Gross income levels (Table 1-1), Head of household, qualifying person (Table 2-1), Nonresident alien spouse. Individual retirement arrangements (IRAs) Roth IRAs, effect of modified AGI on contributions (Table 9-3), Contributions not reported. Roth IRAs, modified AGI (Worksheet 9-2), More information. Roth IRA and modified adjusted gross income (MAGI) phaseout (Table 9-3), Contributions not reported. Standard deduction tables, 2021 Standard Deduction Tables Tax returns Steps to prepare (Table 1-6), Table 1-6. Six Steps for Preparing Your Paper Return Tax Counseling for the Elderly, Free Help With Your Return Tax credits (see Credits) Tax evasion, Criminal Penalties Tax figured by IRS, Tax Figured by IRS Tax help, Help from the IRS., Free Help With Your Return, How To Get Tax Help Tax Counseling for the Elderly, Free Help With Your Return Volunteer counseling (Volunteer Income Tax Assistance program), Free Help With Your Return, Volunteer tax counseling. Tax preference items, Adjustments and tax preference items. Tax rates, Widow(er). Married filing separately (Schedule Y-2), How to file. Tax refunds Agreement with IRS extending assessment period, claim based on, Exceptions for special types of refunds. Bad debts, Exceptions for special types of refunds. Business tax credit carrybacks, Exceptions for special types of refunds. Cashing check, Cashing your refund check. Check's expiration date, Cashing your refund check. Claim for, Interest on Refunds, Amended Returns and Claims for Refund, Processing claims for refund. Limitations period, Time for filing a claim for refund. Litigation, Taking your claim to court. Direct deposit, Refunds Erroneous refunds, Interest on erroneous refund. Federal income tax refunds, Federal income tax refund. Financially disabled, Financially disabled. Foreign tax paid or accrued, Exceptions for special types of refunds. General rules, Refunds. Inquiries, Refund inquiries. Interest on, Interest on Refunds, Interest on refund., Interest on tax refunds. Late filed returns, Reminders Limits, Limit on amount of refund., Tax paid. Exceptions, Exceptions for special types of refunds. More or less than expected, Refund more or less than expected. Net operating loss carryback, Exceptions for special types of refunds. Offset Against debts, Refunds., Offset against debts. Against next year's tax, Refunds Offset against next year's tax, How To Pay Estimated Tax Past-due, Refund inquiries., Refund Information Real estate taxes, treatment of, Refund (or rebate). Reduced, Reduced refund. State and local income tax refunds, Refund applied to taxes., Refund (or credit) of state or local income taxes. State liability, effect on, Effect on state tax liability. Under $1, Overpayment less than one dollar. Withholding, Who Should File Worthless securities, Exceptions for special types of refunds. Tax returns, Signatures, Accounting period. (see also Joint Returns) (see also Signatures) Aliens, Aliens Amended, Amended Returns and Claims for Refund, Form 1040-X., Filing Form 1040-X., Changing your mind. (see also Form 1040-X) Attachments to returns, Attachments Child, Spouse unable to sign. Copies of, Copies of tax returns. Dating of, Signatures Filing of, Filing Information (see also Filing requirements) Forms to use, Form 1040 or 1040-SR Free preparation help, Free Help With Your Return How to file, How Do I Prepare My Return? Mailing of, Mailing your paper return. Paid preparer, Paid Preparer Payment with, Amount You Owe Private delivery services, Private delivery services. Steps to prepare (Table 1-6), Table 1-6. Six Steps for Preparing Your Paper Return Third party designee, Third Party Designee Who must file, Do I Have To File a Return?, Who Should File Tax Returns Transcript of, Copies of tax returns. Tax table, Tax Tables Tax year, When Do I Have To File?, When Do I Report My Income and Expenses?, Accounting Periods (see also Accounting periods) Tax-exempt Bonds and other obligations, State or Local Government Obligations Income, Tax-Exempt Income Expenses Interest, State or Local Government Obligations Tax-exempt income, Tax-exempt income. Taxes, Household workers., Taxes, Other taxes., Tax. Alternative minimum, Alternative Minimum Tax (AMT) Business taxes, deduction of, Business taxes. Deduction of, Tests To Deduct Any Tax Schedules to use, Where To Deduct Estate (see Estate tax) Excise (see Excise taxes) Federal income taxes, not deductible, Taxes and Fees You Can’t Deduct Foreign taxes, Foreign taxes. Income tax, deduction of, Foreign Income Taxes Gift taxes, Taxes and Fees You Can’t Deduct Income taxes, deduction of, Income Taxes Indian tribal government taxes, deduction of, Indian tribal government. Inheritance tax, Taxes and Fees You Can’t Deduct Kiddie tax (see Children, subheading: Unearned income of) Not deductible, Taxes and Fees You Can’t Deduct Personal property taxes Deduction of, Personal Property Taxes Real estate taxes (see Real estate taxes) Taxes, not support, Don’t Include in Total Support Taxpayer identification number (TIN) Adoption (ATIN), Adoption taxpayer identification number (ATIN). Individual (ITIN), Individual taxpayer identification number (ITIN)., Born and died in 2021. Social security number (see Social security number (SSN)) Telephones, Residential Telephone Service Fraud or misconduct of IRS employee, number for reporting anonymously, Reminders Temporary absences, Temporary absences., Temporary absences. Tenants By the entirety, General Information In common, General Information Tenants by the entirety Real estate taxes, allocation when filing separately, Tenants by the entirety. Terminal illness Accelerated payment of life insurance proceeds (see Accelerated death benefits) Viatical settlements, Viatical settlement. Terrorist attacks Disability pensions for federal employees, Terrorist attack or military action. Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Third parties Designee for IRS to discuss return with, Third Party Designee Income from taxpayer's property paid to, Payment to third party. Tiebreaker rules, Tiebreaker rules. Tip income Allocated tips, Allocated tips. Withholding, Tips Underwithholding, Not enough pay to cover taxes. Total support, Total Support Tour guides Free tour for organizing tour, Free tour. Trade Act of 1974 Trade readjustment allowances under, Types of unemployment compensation. Traditional IRAs (see Individual retirement arrangements (IRAs)) Transfer taxes Real estate transactions and, Transfer taxes (or stamp taxes). Transit passes, Transit pass. Travel and transportation expenses Commuting expenses Employer-provided commuter vehicle, Commuter highway vehicle. Expenses paid for others, Travel Expenses for Another Individual Fringe benefits, Transportation Job search expenses, Job interview expenses. Parking fees Employer-provided fringe benefit, Qualified parking. School children, transporting of, Transporting school children. Transit pass, Transit pass. Treasury bills, notes, and bonds, U.S. Treasury Bills, Notes, and Bonds Treasury Inspector General Telephone number to report anonymously fraud or misconduct of IRS employee, Reminders Treasury notes, U.S. obligations. Trust beneficiaries Losses of trust, Losses. Receiving income from trust, Estate and trust income., Current income required to be distributed., Current income not required to be distributed., Gifts and inheritances. Trustees Administrative fees, Trustee's Administrative Fees for IRA IRA, Trustee's Administrative Fees for IRA IRAs Fees, Trustees' fees., Trustees' fees. Transfer from trustee to trustee, Trustee-to-Trustee Transfer, Conversion methods. Trusts, Current income required to be distributed., Losses. (see also Trust beneficiaries) Grantor trusts, Grantor trust. Income, Estate and trust income. TTY/TDD information, Tax Information Tuition Qualified programs (see Qualified tuition programs) Tuition programs, qualified (see Qualified tuition programs) Tuition, benefits under GI Bill, Tuition payments and allowances under the GI Bill. U.S. citizen or resident, Citizen or Resident Test U.S. national, U.S. national. U.S. obligations, interest, U.S. obligations., U.S. Savings Bonds U.S. possessions Deduction of income tax paid to, Foreign Income Taxes Income from, Individuals With Income From U.S. Possessions U.S. savings bonds Education, used for, Special Rules Interest on, Interest on qualified savings bonds. U.S. Treasury bills, notes, and bonds, U.S. Treasury Bills, Notes, and Bonds U.S. Virgin Islands Income from, Individuals With Income From U.S. Possessions Underpayment penalties, , Underpayment penalty., Underpayment Penalty for 2021 IRS computation, IRS can figure the penalty for you. Unearned income Children, Tax on unearned income of certain children. Unearned income of child (see Children, subheading: Unearned income of) Unemployment compensation, Unemployment Benefits Credit card insurance paying, Credit card insurance. Mandatory contributions to state funds, deduction of, Contributions to state benefit funds. Private fund, from, Private unemployment fund. Repayment of benefits, Repayment of unemployment compensation., Repayment of benefits. Reporting on Form 1040, Supplemental unemployment benefits. Supplemental benefits, Supplemental unemployment benefits. Voluntary benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Withholding, Unemployment Compensation, Tax withholding. Unions, Union agreements., Payments by a union., Union benefits and dues., Strike and lockout benefits. (see also Labor unions) Unmarried persons (see Single taxpayers) Usurious interest, Usurious interest. Utilities Energy conservation subsidies, Energy conservation subsidies., Utility rebates. Rebates, Utility rebates. Veterans benefits, Veterans' benefits. Retroactive determination, Retroactive VA determination. Special statute of limitations., Special period of limitation. Veterans' benefits Educational assistance, Department of Veterans Affairs (VA) payments. Viatical settlements, Viatical settlement., Exclusion for terminal illness. VISTA volunteers, Volunteers in Service to America (VISTA). Volunteer firefighters IRAs, Volunteer firefighters. Volunteer work, Volunteers Tax counseling (Volunteer Income Tax Assistance program), Free Help With Your Return, Volunteer tax counseling. Vouchers for payment of tax, How To Pay Estimated Tax, Pay by Check or Money Order Using the Estimated Tax Payment Voucher W-2 form (see Form W-2) Wages and salaries, Form W-2., Wages, Salaries, and Other Earnings, Restricted Property, Reimbursement for medical care. (see also Form W-2) Accident and health insurance, Accident or Health Plan Accrued leave payment, Accrued leave payment. Adoption, employer assistance, Adoption Assistance Advance commissions, Advance commissions and other earnings. Allowances and reimbursements, Expense allowances., Allowances and reimbursements. Archer MSA contributions, Archer MSA contributions. Awards and prizes, Bonuses and awards. Babysitting, Childcare providers. Back pay awards, Back pay awards. Bonuses, Bonuses and awards. Child care providers, Childcare providers. Children's earnings, Child's earnings. Clergy, Clergy De minimis benefits, De Minimis (Minimal) Benefits Elective deferrals, Elective deferrals. Employee achievement award, Employee achievement award. Employee compensation, Employee Compensation Farmworkers, Farmworkers. Foreign employer, Foreign Employer Form W-2 (see Form W-2) Fringe benefits, Fringe Benefits Garnished, Garnished wages. Government cost-of-living allowances, Government cost-of-living allowances. Household workers, Household workers. Long-term care coverage, Accident or Health Plan Military retirees, Military retirees., Military retirement pay. Military service, Military Miscellaneous compensation, Miscellaneous Compensation Note for services, Note received for services. Outplacement services, Outplacement services. Religious orders, Members of Religious Orders Restricted property, Restricted Property Dividends on restricted stock, Stock you elected to include in income. Retirement plan contributions by employer, Retirement Plan Contributions Severance pay, Severance pay. Sick pay, Sick pay., Other compensation. Social security and Medicare taxes paid by employer, Social security and Medicare taxes paid by employer. Stock appreciation rights, Stock appreciation rights. Stock options, Stock Options Supplemental, Supplemental Wages Volunteer work, Volunteers Withholding (see Withholding) War zone (see Combat zone) Washington State Supplemental Workmen's Compensation Fund, Contributions to state benefit funds. Welfare benefits, Support provided by the state (welfare, food stamps, housing, etc.)., Welfare and Other Public Assistance Benefits What's new, What's New Where to file, Where Do I File?, Where To File Widow/widower (see Surviving spouse) Winter energy payments, Energy conservation subsidies. Withholding, Form W-2., Tax Withholding and Estimated Tax (see also Form W-2) Agricultural Act of 1949 payments, Federal Payments Changing amount withheld, Changing Your Withholding For 2022, Changing your withholding for 2023. Checking amount of, Checking Your Withholding Claim for refund, Who Should File Commodity credit loans, Federal Payments Credit for, , Credit for Withholding and Estimated Tax for 2021 Cumulative wage method, Cumulative wage method. Definition, Determining amount to withhold, Determining Amount of Tax Withheld Using Form W-4, Getting the Right Amount of Tax Withheld Disaster Assistance Act of 1988 payments, Federal Payments Employers, rules for, Rules Your Employer Must Follow Exemption from, Exemption From Withholding Federal income taxes, not deductible, Taxes and Fees You Can’t Deduct Form W-4 Provided by employer, New Form W-4. Fringe benefits, Taxable Fringe Benefits Gambling winnings, Gambling Winnings, Form W-2G General rules, Tax Withholding for 2022 Highest rate, employer must withhold at if no W-4, No Form W-4. Incorrect form, Form Not Correct IRA distributions, Withholding. New job, New Job Penalties, , Penalties, Penalties. Pensions and annuities, Form W-2., Pensions and Annuities Railroad retirement benefits, Federal Payments, Tax withholding and estimated tax. Repaying withheld tax, Repaying withheld tax. Salaries and wages, Salaries and Wages Separate returns, Separate Returns Sick pay, Sick Pay Social security benefits, Federal Payments, Tax withholding and estimated tax. State and local income taxes, deduction for, Withheld taxes. Supplemental wages, Supplemental Wages Tips (see Tip income) Unemployment compensation, Unemployment Compensation, Tax withholding. Workers' compensation, Workers' Compensation Mandatory contributions to state funds, deduction of, Contributions to state benefit funds. Return to work, Return to work. Worksheets Roth IRA modified adjusted gross income (MAGI), computation (Worksheet 9-2), More information. Social security or railroad retirement benefits, to figure taxability, Worksheet 7-1., Which worksheet to use. Support test, Worksheet 3-1. Worksheet for Determining Support Wristwatch, Wristwatches Write-offs (see Cancellation of debt) |
Choose the method of pay that would result in the most earnings for one month on sales of $60,000.
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