Janice Morgan,

1040 INSTRUCTIONS

FUTURE DEVELOPMENTS

The IRS has created a page on IRS.gov for information about Form 1040 and its instructions at www.irs.gov/form1040. Information about any future developments affecting Form 1040 (such as legislation enacted after we release it) will be posted on that page.

2011 Get a faster refund, reduce errors, and save paper. For more information on IRS e-file and Free File, see Options for e-filing your returns in these instructions or click on IRS e-file at IRS.gov.

Department of the Treasury Internal Revenue Service IRS.gov IRS

makes doing your taxes faster and easier.

is the fast, safe, and free way to prepare and e-file your taxes. See www.irs.gov/freefile.

MAILING YOUR RETURN

If you file a paper return, you may be mailing it to a different address this year.

NEW FORMS

You may have to report your capital gains and losses on new Form 8949 and report the totals on Schedule D. If you have foreign financial assets, you may have to file new Form 8938.

For details on these and other changes, see What’s New in these instructions.

NOTE: THIS BOOKLET DOES NOT CONTAIN TAX FORMS

Including Instructions for Schedules A, C, D, E, F, J, R, and SE

Cat. No. 11325E

Dear Taxpayer,A Message From the Commissioner As we enter the 2012 tax filing season, the IRS is always looking to find new

and innovative ways to help you get your tax questions answered. The newest is our smartphone application, IRS2Go, which can be downloaded for free. You can do a number of things with this app, such as checking the status of your tax refund or subscribing to tax tips.

We also continue to enhance our website, IRS.gov, which is the most convenient way to get tax information. We also post videos on YouTube to help taxpayers understand their tax obligations. Check these out at www.youtube. com/irsvideos. Our news feed on Twitter, @IRSnews, is another excellent source of tax information.

Keep in mind that a number of federal tax incentives that were enacted in 2009 as part of the American Recovery and Reinvestment Act are still in effect for 2011. These include the American opportunity credit and the expanded earned income credit. Make sure to check to see if you qualify for these and other important deductions and credits.

Remember that the fastest, safest and easiest way to get your refund is to e-file and use direct deposit. E-file has become so popular that nearly eight out of 10 individual taxpayers now e-file their return. It’s now the first choice for about 112 million taxpayers.

Taxpayers below a certain income level can qualify to use free tax preparation software through the Free File program. Plus, everyone can e-file for free using a fillable form available at IRS.gov.

We know that it takes time to prepare and file a tax return, but the IRS wants to help you fulfill your tax obligations and will continue to go the extra mile to provide assistance.

Sincerely,

Douglas H. Shulman

The IRS Mission

Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.

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Table of Contents

Contents Page Contents Page Department of the Taxpayer Advocate Service . . . . . . . . . . . . 4 2011 Earned Income Credit (EIC)Treasury Table . . . . . . . . . . . . . . . . . . . . . . . . 52

Suggestions for Improving the IRSInternal (Taxpayer Advocacy Panel) . . . . . . . . . . 4 Refund . . . . . . . . . . . . . . . . . . . . . . . . . 69Revenue Service IRS e-file . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Amount You Owe . . . . . . . . . . . . . . . . 71

What’s New . . . . . . . . . . . . . . . . . . . . . . . . 6 Third Party Designee . . . . . . . . . . . . . . 72

Filing Requirements . . . . . . . . . . . . . . . . . . 7 Sign Your Return . . . . . . . . . . . . . . . . . 72

Do You Have To File? . . . . . . . . . . . . . . 7 Assemble Your Return . . . . . . . . . . . . . 73

When and Where Should You File? . . . . 7 2011 Tax Table . . . . . . . . . . . . . . . . . . 74

Where To Report Certain Items 2011 Tax Computation Worksheet . . . . 86 From 2011 Forms W-2, 1097,

General Information . . . . . . . . . . . . . . . . . 871098, and 1099 . . . . . . . . . . . . . . . . . 10

Refund Information . . . . . . . . . . . . . . . 90Line Instructions for Form 1040 . . . . . . . . 12

What Is TeleTax? . . . . . . . . . . . . . . . . . 90Name and Address . . . . . . . . . . . . . . . . 12

Calling the IRS . . . . . . . . . . . . . . . . . . . 92Social Security Number (SSN) . . . . . . . 12

Quick and Easy Access to Tax HelpPresidential Election Campaign Fund . 12 and Tax Forms and Publications . . . . 93

Filing Status . . . . . . . . . . . . . . . . . . . . . 12 Disclosure, Privacy Act, and Paperwork

Exemptions . . . . . . . . . . . . . . . . . . . . . 14 Reduction Act Notice . . . . . . . . . . . . . . 94

Income . . . . . . . . . . . . . . . . . . . . . . . . . 19 Order Form for Forms and Publications . 96

Adjusted Gross Income . . . . . . . . . . . . 28 Major Categories of Federal Income and Outlays For Fiscal Year 2010 . . . . 97

Tax and Credits . . . . . . . . . . . . . . . . . . 33 2011 Tax Rate Schedules . . . . . . . . . . . . . 98

Other Taxes . . . . . . . . . . . . . . . . . . . . . 42 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Payments . . . . . . . . . . . . . . . . . . . . . . . 44

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The Taxpayer Advocate Service Is Here To Help

Taxpayer Advocate Service If you think TAS might be able to help you, call your local The Taxpayer Advocate Service (TAS) is your voice at the advocate, whose number is in your phone book and on our IRS. Our job is to ensure that every taxpayer is treated fairly, website at www.irs.gov/advocate. You can also call our and that you know and understand your rights. We offer free toll-free number at 1-877-777-4778. help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on TAS also handles large-scale or systemic problems that affect your own. Remember, the worst thing you can do is nothing at many taxpayers. If you know of one of these broad issues, all! please report it to us through our Systemic Advocacy

Management System at www.irs.gov/advocate. TAS can help if you can’t resolve your problem with the IRS and: Low Income Taxpayer Clinics

• Your problem is causing financial difficulties for you, Low Income Taxpayer Clinics (LITCs) are independent from your family, or your business. the IRS. Some clinics serve individuals whose income is below

a certain level and who need to resolve a tax problem. These• You face (or your business is facing) an immediate threat clinics provide professional representation before the IRS or inof adverse action. court on audits, appeals, tax collection disputes, and other• You’ve tried repeatedly to contact the IRS but no one has issues for free or for a small fee. Some clinics can provideresponded to you, or the IRS hasn’t responded by the date information about taxpayer rights and responsibilities in manypromised. different languages for individuals who speak English as a second language. For more information and to find a clinicIf you qualify for our help, we’ll do everything we can to get near you, see the LITC page on www.irs.gov/advocate or IRSyour problem resolved. You’ll be assigned to one advocate Publication 4134, Low Income Taxpayer Clinic List. Thiswho will be with you at every turn. We have offices in every publication is also available by calling 1-800-829-3676 or atstate, the District of Columbia, and Puerto Rico. Although your local IRS office.TAS is independent within the IRS, our advocates know how

to work with the IRS to get your problems resolved. And our services are always free.

As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Our online tax toolkit at www. TaxpayerAdvocate.irs.gov can help you understand these rights.

Suggestions for Improving the IRS

Taxpayer Advocacy Panel

Have a suggestion for improving the IRS and do not know who to contact? The Taxpayer Advocacy Panel (TAP) is a diverse group of citizen volunteers who listen to taxpayers, identify taxpayers’ issues, and make suggestions for improving IRS service and customer satisfaction. The panel is demographically and geographically diverse, with at least one member from each state, the District of Columbia, and Puerto Rico. Contact TAP at www.improveirs.org or 1-888-912-1227 (toll-free).

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IRS e-file: It’s Safe. It’s Easy. It’s Time.

Volunteers are available in communities nationwide providing free tax assistance to low to moderate income (generally under $50,000 in adjusted gross income) and elderly taxpayers (age 60 and older). At selected sites, taxpayers can input and electronically file their own tax return with the assistance from an IRS-certified volunteer.

Why do 80% of Americans file their taxes electronically? Security—The IRS uses the latest encryption technology to safeguard your information.

Faster Refunds—Get your refund faster by e-filing using direct deposit.

It’s Free—through Free File.

Flexible Payments—File early; pay by April 17.

Quick Receipt—Receive an acknowledgment that your return was accepted.

Go Green—Reduce the amount of paper used.

IRS.gov is the gateway to all electronic services offered by the IRS, as well as the spot to download forms if you should choose to file a paper return.

Options for e-filing your returns—safely, quickly, and easily.

If your adjusted gross income was $57,000 or less in 2011, you can use free tax software to prepare and e-file your tax return. Earned more? Use Free File Fillable Forms.

Greater Accuracy—Fewer errors mean faster processing.

Joining the 110 million Americans who already are using e-file is easy. Just ask your paid or volunteer tax preparer, use commercial software, or use Free File. IRS e-file is the safest, most secure way to transmit your tax return to the IRS. Since 1990, the IRS has processed more than 1 billion e-filed tax returns safely and securely. There’s no paper return to be lost or stolen.

Starting January 1, 2012, many tax return preparers will be required to use IRS e-file. If you are asked if you want to e-file, just give it a try. IRS e-file is now the norm, not the exception. Most states also use electronic filing.

Free File. This public-private partnership, between the IRS and tax software providers, makes approximately 20 popular commercial software products and e-file available for free. Seventy percent of the nation’s taxpayers are eligible.

Just visit www.irs.gov/freefile for details. Free File combines all the benefits of e-file and easy-to-use software at no cost. Guided questions will help ensure you get all the tax credits and deductions you are due. It’s fast, safe, and free.

You can review each provider’s eligibility rules or use an online tool to find those software products that match your situation. Some providers offer state tax return preparation either for a fee or for free. Free File also is available in English and Spanish.

Free File Fillable Forms. The IRS offers electronic versions of IRS paper forms that also can be e-filed for free. Free File Fillable Forms is best for people experienced in preparing their own tax returns. There are no income limitations. Free File Fillable Forms does basic math calculations. It supports only federal tax forms.

Free e-file Help Available Nationwide

Everyone Can Free File

See Free Tax Return Assistance near the end of these instructions for additional information or visit IRS.gov (Keyword: VITA) for a VITA/TCE site near you!

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For information about any additional changes to the 2011 tax law or any other developments affecting Form 1040 or its instructions, go to www.irs.gov/form1040.What’s New

Due date of return. File Form 1040 by after December 31, 2008, and ending must report half of it on your 2011 return April 17, 2012. The due date is April 17, before May 1, 2010. See the instructions and the rest on your 2012 return. See the instead of April 15, because April 15 is a for line 67. instructions for lines 16a and 16b. Sunday and April 16 is the Emancipation

Health savings accounts (HSAs) andRepayment of first-time homebuyer credit.Day holiday in the District of Columbia. Archer MSAs. The additional tax on distri-If you have to repay the credit, you may be

Capital gains and losses. In most cases, butions from HSAs and Archer MSAs notable to do so without attaching Form 5405. you must report your capital gains and used for qualified medical expenses has in-See the instructions for line 59b. losses on new Form 8949 and report the creased to 20% for distributions after 2010.

Standard mileage rates. The 2011 rate fortotals on Schedule D. If you sold a covered See Form 8889 or Form 8853 (and the in- business use of your vehicle is increased tosecurity in 2011, your broker will send you structions) for details. 51 cents a mile (551⁄2 cents a mile after Junea Form 1099-B (or substitute statement)

Foreign financial assets. If you had foreign30, 2011). The 2011 rate for use of yourthat shows your basis. This will help you financial assets in 2011, you may have tovehicle to get medical care or to move iscomplete Form 8949. Generally, a covered file new Form 8938 with your return.increased to 19 cents a mile (231⁄2 cents asecurity is a security acquired after 2010. Check www.irs.gov/form8938 for details.mile after June 30, 2011). In addition, be-See the instructions for line 13.

ginning in 2011, you may use the businessSelf-employed health insurance deduction. Schedule L. Schedule L is no longer in use.standard mileage rate for a vehicle used forThis deduction is no longer allowed on You do not need it to figure your 2011 stan-hire, such as a taxicab.Schedule SE. However, you can still take it dard deduction. Instead, see the instruc- on Form 1040, line 29. See the instructions tions for line 40.Roth IRAs. If you converted or rolled over for line 29 for more information about this an amount to a Roth IRA in 2010 and did Expired tax benefits. The making workdeduction. not elect to report the taxable amount on pay credit has expired. You cannot claim ityour 2010 return, you generally must reportAlternative minimum tax (AMT) on your 2011 return. Schedule M is nohalf of it on your 2011 return and the restexemption amount increased. The AMT longer in use.on your 2012 return. Report the amountexemption amount has increased to

that is taxable on your 2011 return on line You cannot claim the alternative motor$48,450 ($74,450 if married filing jointly 15b (for conversions from IRAs) or 16b vehicle credit for a vehicle you bought afteror a qualifying widow(er); $37,225 if mar- (for rollovers from qualified retirement 2010, unless the vehicle is a new fuel cellried filing separately). plans, other than from a designated Roth motor vehicle. See Form 8910 and its in-

First-time homebuyer credit. To claim the account). See the instructions for lines 15a structions. first-time homebuyer credit for 2011, you and 15b and lines 16a and 16b. (or your spouse if married) must have been Mailing your return. If you are filing a pa- a member of the uniformed services or For- Designated Roth accounts. If you rolled per return, you may be mailing it to a dif- eign Service or an employee of the intelli- over an amount from a 401(k) or 403(b) ferent address this year because the IRS has gence community on qualified official plan to a designated Roth account in 2010 changed the filing location for several ar- extended duty outside the United States for and did not elect to report the taxable eas. See Where Do You File? at the end of at least 90 days during the period beginning amount on your 2010 return, you generally these instructions.

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These rules apply to all U.S. citizens, regardless of where they live, and resident aliens.Filing Have you tried IRS e-file? It’s the fastest way to get your refund and it’s free if you are eligible. Visit IRS.gov for details.Requirements

• You elected to be taxed as a resident If you are a U.S. citizen or resident alien. alien, you may qualify for an automaticDo You Have To File? See Pub. 519 for details. extension of time to file without filing

Use Chart A, B, or C to see if you must file Form 4868. You qualify if, on the due date Specific rules apply to deter-a return. U.S. citizens who lived in or had of your return, you meet one of the follow- mine if you are a resident alien,income from a U.S. possession should see ing conditions. nonresident alien, or dual-statusPub. 570. Residents of Puerto Rico can use • You live outside the United States andCAUTION

! alien. Most nonresident aliensTeleTax topic 901 to see if they must file. Puerto Rico and your main place of busi-and dual-status aliens have different filing

ness or post of duty is outside the UnitedEven if you do not otherwise requirements and may have to file Form States and Puerto Rico.have to file a return, you should 1040NR or Form 1040NR-EZ. Pub. 519

file one to get a refund of any • You are in military or naval service ondiscusses these requirements and other in- TIP

federal income tax withheld. duty outside the United States and Puertoformation to help aliens comply with U.S. You should also file if you are eligible for Rico.tax law, including tax treaty benefits and any of the following credits. special rules for students and scholars. This extension gives you an extra 2• Earned income credit. months to file and pay the tax, but interest

will be charged from the original due date• Additional child tax credit. of the return on any unpaid tax. You must• American opportunity credit. When and Where include a statement showing that you meet• First-time homebuyer credit. the requirements. If you are still unable to• Credit for federal tax on fuels. Should You File? file your return by the end of the 2-month

• Adoption credit. period, you can get an additional 4 monthsFile Form 1040 by April 17, 2012. (The if, no later than June 15, 2012, you file• Refundable credit for prior year due date is April 17, instead of April 15, Form 4868. This 4-month extension of timeminimum tax. because April 15 is a Sunday and April 16 to file does not extend the time to pay youris the Emancipation Day holiday in the Dis-• Health coverage tax credit. tax. See Form 4868.trict of Columbia). If you file after this date,See Pub. 501 for details. Also see Pub. you may have to pay interest and penalties.501 if you do not have to file but received a Private Delivery ServicesSee Interest and Penalties, later.Form 1099-B (or substitute statement). You can use certain private delivery serv-If you were serving in, or in support of,Exception for certain children under age ices designated by the IRS to meet thethe U.S. Armed Forces in a designated19 or full-time students. If certain condi- ‘‘timely mailing as timely filing/paying’’combat zone or contingency operation, youtions apply, you can elect to include on rule for tax returns and payments. Thesemay be able to file later. See Pub. 3 foryour return the income of a child who was private delivery services include only thedetails.under age 19 at the end of 2011 or was a following.

Filing instructions and addresses are atfull-time student under age 24 at the end of • DHL Express (DHL): DHL Same Daythe end of these instructions.2011. To do so, use Form 8814. If you Service. make this election, your child does not have • Federal Express (FedEx): FedEx Pri-What if You Cannot File onto file a return. For details, use TeleTax

ority Overnight, FedEx Standard Over-Time?topic 553 or see Form 8814. night, FedEx 2Day, FedEx International

A child born on January 1, 1988, is con- You can get an automatic 6-month exten- Priority, and FedEx International First. sidered to be age 24 at the end of 2011. Do sion (to October 15, 2012) if, no later than • United Parcel Service (UPS): UPSnot use Form 8814 for such a child. the date your return is due, you file Form Next Day Air, UPS Next Day Air Saver,4868. For details, see Form 4868.Resident aliens. These rules also apply if UPS 2nd Day Air, UPS 2nd Day Air A.M., you were a resident alien. Also, you may UPS Worldwide Express Plus, and UPSAn automatic 6-month exten- qualify for certain tax treaty benefits. See Worldwide Express.sion to file does not extend the Pub. 519 for details. time to pay your tax. If you do The private delivery service can tell youCAUTION

! not pay your tax by the original how to get written proof of the mailingNonresident aliens and dual-status aliens.

due date of your return, you will owe inter- date.These rules also apply if you were a nonres- est on the unpaid tax and may owe penal-ident alien or a dual-status alien and both of ties. See Form 4868.the following apply.

• You were married to a U.S. citizen or resident alien at the end of 2011.

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Chart A—For Most People

AND at the end of 2011 THEN file a return if your gross IF your filing status is . . . you were* . . . income** was at least . . .

Single under 65 $9,500 (see the instructions for line 1) 65 or older 10,950

under 65 (both spouses) $19,000Married filing jointly*** 65 or older (one spouse) 20,150(see the instructions for line 2) 65 or older (both spouses) 21,300

Married filing separately (see the any age $3,700instructions for line 3)

Head of household (see the instructions for under 65 $12,200 line 4) 65 or older 13,650

Qualifying widow(er) with dependent child under 65 $15,300 (see the instructions for line 5) 65 or older 16,450

*If you were born on January 1, 1947, you are considered to be age 65 at the end of 2011. **Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2011 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the instructions for lines 20a and 20b to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949. Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. ***If you did not live with your spouse at the end of 2011 (or on the date your spouse died) and your gross income was at least $3,700, you must file a return regardless of your age.

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Chart B—For Children and Other Dependents

If your parent (or someone else) can claim you as a dependent, use this chart to see if you must file a return. In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment

compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income.

Single dependents. Were you either age 65 or older or blind?

No. You must file a return if any of the following apply. • Your unearned income was over $950. • Your earned income was over $5,800. • Your gross income was more than the larger of—

• $950, or • Your earned income (up to $5,500) plus $300.

Yes. You must file a return if any of the following apply. • Your unearned income was over $2,400 ($3,850 if 65 or older and blind). • Your earned income was over $7,250 ($8,700 if 65 or older and blind). • Your gross income was more than the larger of—

• $2,400 ($3,850 if 65 or older and blind), or • Your earned income (up to $5,500) plus $1,750 ($3,200 if 65 or older and blind).

Married dependents. Were you either age 65 or older or blind?

No. You must file a return if any of the following apply. • Your unearned income was over $950. • Your earned income was over $5,800. • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. • Your gross income was more than the larger of—

• $950, or • Your earned income (up to $5,500) plus $300.

Yes. You must file a return if any of the following apply. • Your unearned income was over $2,100 ($3,250 if 65 or older and blind). • Your earned income was over $6,950 ($8,100 if 65 or older and blind). • Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. • Your gross income was more than the larger of—

• $2,100 ($3,250 if 65 or older and blind), or • Your earned income (up to $5,500) plus $1,450 ($2,600 if 65 or older and blind).

Chart C—Other Situations When You Must File

You must file a return if any of the four conditions below apply for 2011.

1. You owe any special taxes, including any of the following. a. Alternative minimum tax. b. Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are

filing a return only because you owe this tax, you can file Form 5329 by itself. c. Household employment taxes. But if you are filing a return only because you owe this tax, you can file Schedule H by itself. d. Social security and Medicare tax on tips you did not report to your employer or on wages you received from an employer who did not

withhold these taxes. e. Recapture of first-time homebuyer credit. See the instructions for line 59b. f. Write-in taxes, including uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on

group-term life insurance and additional taxes on health savings accounts. See the instructions for line 60. g. Recapture taxes. See the instructions for line 44 and line 60.

2. You (or your spouse, if filing jointly) received HSA, Archer MSA, or Medicare Advantage MSA distributions.

3. You had net earnings from self-employment of at least $400.

4. You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.

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Where To Report Certain Items From 2011 Forms W-2, 1097, 1098, and 1099

IRS e-file takes the guesswork out of preparing your return. You may also be eligible to use Free File to file your federal income tax return. Visit www.irs.gov/efile for details.

If any federal income tax withheld is shown on these forms, include the tax withheld on Form 1040, line 62. If you itemize your deductions and any state or local income tax withheld is shown on these forms, include the tax withheld on Schedule A, line 5, unless you elect to deduct state and local general sales taxes.

Form Item and Box in Which It Should Appear Where To Report

W-2 Wages, tips, other compensation (box 1) Form 1040, line 7 Allocated tips (box 8) See Wages, Salaries, Tips, etc. Dependent care benefits (box 10) Form 2441, Part III Adoption benefits (box 12, code T) Form 8839, line 16 Employer contributions to an Form 8853, line 1

Archer MSA (box 12, code R) Employer contributions to a health savings Form 8889, line 9

account (box 12, code W) Uncollected social security and Medicare or See the instructions for Form 1040, line 60

RRTA tax (box 12, code A, B, M, or N)

W-2G Gambling winnings (box 1) Form 1040, line 21 (Schedule C or C-EZ for professional gamblers)

1097-BTC Bond tax credit See Form 8912 and its instructions

1098 Mortgage interest (box 1) Schedule A, line 10, but first see the instructions on Form 1098*Points (box 2) } Refund of overpaid interest (box 3) Form 1040, line 21, but first see the instructions on Form 1098* Mortgage insurance premiums (box 4) See the instructions for Schedule A, line 13*

1098-C Contributions of motor vehicles, boats, and Schedule A, line 17 airplanes

1098-E Student loan interest (box 1) See the instructions for Form 1040, line 33*

1098-MA Homeowner mortgage payments (box 3) Schedule A, line 10, but first see the instructions on Form 1098-MA

1098-T Qualified tuition and related expenses See the instructions for Form 1040, line 34, or Form 1040, line 49; but (box 1) first see the instructions on Form 1098-T*

1099-A Acquisition or abandonment of secured property See Pub. 4681

1099-B Sales price of stocks, bonds, etc. (box 2), cost or Form 8949, but first see the Instructions for Schedule D other basis (box 3), and wash sale loss disallowed (box 5)

Aggregate profit or (loss) on contracts (box 13) Form 6781, line 1 Bartering (box 14) See Pub. 525

1099-C Canceled debt (box 2) See Pub. 4681

1099-DIV Total ordinary dividends (box 1a) Form 1040, line 9a Qualified dividends (box 1b) See the instructions for Form 1040, line 9b Total capital gain distributions (box 2a) Form 1040, line 13, or, if required, Schedule D, line 13 Unrecaptured section 1250 gain (box 2b) See the instructions for Schedule D, line 19 Section 1202 gain (box 2c) See Exclusion of Gain on Qualified Small Business (QSB) Stock in the

instructions for Schedule D Collectibles (28%) gain (box 2d) See the instructions for Schedule D, line 18 Nondividend distributions (box 3) See the instructions for Form 1040, line 9a Investment expenses (box 5) Schedule A, line 23 Foreign tax paid (box 6) Form 1040, line 47, or Schedule A, line 8; but first see the instructions

for line 47

1099-G Unemployment compensation (box 1) See the instructions for Form 1040, line 19 State or local income tax refunds, credits, or See the instructions for Form 1040, line 10, and if box 8 on Form

offsets (box 2) 1099-G is checked, see the box 8 instructions ATAA/RTAA payments (box 5) Form 1040, line 21 Taxable grants (box 6) Form 1040, line 21* Agriculture payments (box 7) See the Instructions for Schedule F or Pub. 225* Market gain (box 9) See the Instructions for Schedule F

*If the item relates to an activity for which you are required to file Schedule C, C-EZ, E, or F or Form 4835, report the taxable or deductible amount allocable to the activity on that schedule or form instead.

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Form Item and Box in Which It Should Appear Where To Report

1099-INT Interest income (box 1) See the instructions for Form 1040, line 8a Early withdrawal penalty (box 2) Form 1040, line 30 Interest on U.S. savings bonds and See the instructions for Form 1040, line 8a

Treasury obligations (box 3) Investment expenses (box 5) Schedule A, line 23 Foreign tax paid (box 6) Form 1040, line 47, or Schedule A, line 8; but first see the instructions

for line 47 Tax-exempt interest (box 8) Form 1040, line 8b Specified private activity bond interest (box 9) Form 6251, line 12

1099-K Merchant card/third party network Schedule C, C-EZ, E, or F payments

1099-LTC Long-term care and accelerated death benefits See Pub. 525 and the Instructions for Form 8853

1099-MISC Rents (box 1) See the Instructions for Schedule E* Royalties (box 2) See the Instructions for Schedule E* (for timber, coal, and iron ore

royalties, see Pub. 544)* Other income (box 3) Form 1040, line 21* Nonemployee compensation (box 7) Schedule C, C-EZ, or F; but if you were not self-employed, see the

instructions on Form 1099-MISC Excess golden parachute payments (box 13) See the instructions for Form 1040, line 60 Other (boxes 5, 6, 8, 9, 10, 14, and 15b) See the instructions on Form 1099-MISC

1099-OID Original issue discount (box 1) } See the instructions on Form 1099-OIDOther periodic interest (box 2) Early withdrawal penalty (box 3) Form 1040, line 30 Original issue discount on U.S. Treasury See the instructions on Form 1099-OID

obligations (box 6) Investment expenses (box 7) Schedule A, line 23

1099-PATR Patronage dividends and other distributions from a Schedule C, C-EZ, or F or Form 4835; but first see the instructions on cooperative (boxes 1, 2, 3, and 5) Form 1099-PATR

Domestic production activities deduction (box 6) Form 8903, line 23 Credits and other deductions (boxes 7, 8, and 10) See the instructions on Form 1099-PATR Patron’s AMT adjustment (box 9) Form 6251, line 27

1099-Q Qualified education program payments See the instructions for Form 1040, line 21

1099-R Distributions from IRAs** See the instructions for Form 1040, lines 15a and 15b Distributions from pensions, annuities, etc. See the instructions for Form 1040, lines 16a and 16b Capital gain (box 3) See the instructions on Form 1099-R

1099-S Gross proceeds from real estate transactions Form 4797, Form 6252, Form 8824, or Form 8949 (box 2)

Buyer’s part of real estate tax (box 5) See the instructions for Schedule A, line 6*

1099-SA Distributions from health savings accounts (HSAs) Form 8889, line 14a Distributions from MSAs*** Form 8853

*If the item relates to an activity for which you are required to file Schedule C, C-EZ, E, or F or Form 4835, report the taxable or deductible amount allocable to the activity on that schedule or form instead.

**This includes distributions from Roth, SEP, and SIMPLE IRAs. ***This includes distributions from Archer and Medicare Advantage MSAs.

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2011 Form 1040—Lines 1 and 2

IRS e-file takes the guesswork out of preparing your return. You may alsoLine be eligible to use Free File to file your federal income tax return. Visit www.irs.gov/efile for details.

Instructions for Form 1040 Section references are to the Internal Revenue Code.

Form SS-5 online at www.socialsecurity. this fund, check the box. If you are filing a gov, from your local SSA office, or by call- joint return, your spouse can also have $3Name and Address ing the SSA at 1-800-772-1213. It usually go to the fund. If you check a box, your tax

Print or type the information in the spaces takes about 2 weeks to get an SSN once the or refund will not change. provided. If you are married filing a sepa- SSA has all the evidence and information it rate return, enter your spouse’s name on needs. line 3 instead of below your name.

Check that both the name and SSN on your Forms 1040, W-2, and 1099 agree Filing StatusIf you filed a joint return for with your social security card. If they do2010 and you are filing a joint Check only the filing status that applies tonot, certain deductions and credits on yourreturn for 2011 with the same you. The ones that will usually give you the

TIP Form 1040 may be reduced or disallowedspouse, be sure to enter your lowest tax are listed last.and you may not receive credit for yournames and SSNs in the same order as on social security earnings. If your Form W-2 • Married filing separately.your 2010 return. shows an incorrect SSN or name, notify • Single. your employer or the form-issuing agent asName Change • Head of household.soon as possible to make sure your earningsIf you changed your name because of mar- • Married filing jointly or qualifyingare credited to your social security record.riage, divorce, etc., be sure to report the widow(er) with dependent child.If the name or SSN on your social securitychange to the Social Security Administra- card is incorrect, call the SSA.tion (SSA) before filing your return. This More than one filing status can

prevents delays in processing your return apply to you. Choose the oneIRS Individual Taxpayer and issuing refunds. It also safeguards your that will give you the lowestIdentification Numbersfuture social security benefits.

TIP tax.(ITINs) for Aliens

Address Change If you are a nonresident or resident alien If you plan to move after filing your return, and you do not have and are not eligible to Line 1use Form 8822 to notify the IRS of your get an SSN, you must apply for an ITIN. new address. For details on how to do so, see Form W-7 Single

and its instructions. It takes 6 to 10 weeks P.O. Box You can check the box on line 1 if any ofto get an ITIN.

the following was true on December 31,Enter your box number only if your post If you already have an ITIN, enter it 2011.office does not deliver mail to your home. wherever your SSN is requested on your

• You were never married.tax return. Foreign Address • You were legally separated accordingNote. An ITIN is for tax use only. It does If you have a foreign address, enter the city to your state law under a decree of divorcenot entitle you to social security benefits or name on the appropriate line. Do not enter or separate maintenance. But if, at the endchange your employment or immigration any other information on that line, but also of 2011, your divorce was not final (anstatus under U.S. law. complete the spaces below that line. Do not interlocutory decree), you are considered abbreviate the country name. Follow the married and cannot check the box on line 1.Nonresident Alien Spouse country’s practice for entering the postal • You were widowed before If your spouse is a nonresident alien, he orcode and the name of the province, county, January 1, 2011, and did not remarry beforeshe must have either an SSN or an ITIN if:or state. the end of 2011. But if you have a depen-• You file a joint return, dent child, you may be able to use the qual-Death of a Taxpayer • You file a separate return and claim an ifying widow(er) filing status. See the

exemption for your spouse, orSee Death of a Taxpayer under General instructions for line 5. Information, later. • Your spouse is filing a separate return.

Line 2 Social Security Presidential Election Married Filing Jointly

You can check the box on line 2 if any ofNumber (SSN) Campaign Fund the following apply.

An incorrect or missing SSN can increase This fund helps pay for Presidential elec- • You were married at the end of 2011,your tax, reduce your refund, or delay your tion campaigns. The fund reduces candi- even if you did not live with your spouse atrefund. To apply for an SSN, fill in Form dates’ dependence on large contributions the end of 2011.SS-5 and return it, along with the appropri- from individuals and groups and places

• Your spouse died in 2011 and you didate evidence documents, to the Social Se- candidates on an equal financial footing in not remarry in 2011.curity Administration (SSA). You can get the general election. If you want $3 to go to

Need more information or forms? Visit IRS.gov. - 12 -

2011 Form 1040—Lines 2 Through 4

• You were married at the end of 2011, Be sure to enter your spouse’s SSN or be claimed as a dependent on someone and your spouse died in 2012 before filing a ITIN on Form 1040. If your spouse does else’s 2011 return. 2011 return. not have and is not required to have an SSN 4. Your child who, even though you are

or ITIN, enter “NRA.” the custodial parent, is neither your depen-For federal tax purposes, a marriage dent nor your qualifying child because ofmeans only a legal union between a man You may be able to file as head the rule for Children of divorced or sepa-and a woman as husband and wife, and the of household if you had a child rated parents in the line 6c instructions.word “spouse” means a person of the oppo- living with you and you livedsite sex who is a husband or a wife. A

TIP If the child is not your dependent, enterapart from your spouse duringhusband and wife filing jointly report their the child’s name on line 4. If you do notthe last 6 months of 2011. See Marriedcombined income and deduct their com- enter the name, it will take us longer topersons who live apart.bined allowable expenses on one return. process your return.

They can file a joint return even if only one had income or if they did not live together

Qualifying child. To find out if someone isall year. However, both persons must sign Line 4 your qualifying child, see Step 1 of the linethe return. Once you file a joint return, you 6c instructions.Head of Householdcannot choose to file separate returns for

that year after the due date of the return. Dependent. To find out if someone is yourThis filing status is for unmarried individu- dependent, see the instructions for line 6c.als who provide a home for certain otherJoint and several tax liability. If you file a

persons. You are considered unmarried forjoint return, both you and your spouse are Exception to time lived with you. Tempo-this purpose if any of the following applies.generally responsible for the tax and inter- rary absences by you or the other person forest or penalties due on the return. This • You were legally separated according special circumstances, such as school, va-means that if one spouse does not pay the to your state law under a decree of divorce cation, business, medical care, militarytax due, the other may have to. Or, if one or separate maintenance at the end of 2011. service, or detention in a juvenile facility,spouse does not report the correct tax, both But if, at the end of 2011, your divorce was count as time lived in the home. Also seespouses may be responsible for any addi- not final (an interlocutory decree), you are Kidnapped child in the line 6c instructions,tional taxes assessed by the IRS. You may considered married. if applicable.want to file separately if: • You are married but lived apart from If the person for whom you kept up a• You believe your spouse is not report- your spouse for the last 6 months of 2011

home was born or died in 2011, you caning all of his or her income, or and you meet the other rules under Married still file as head of household as long as thepersons who live apart, below.• You do not want to be responsible for home was that person’s main home for theany taxes due if your spouse does not have • You are married to a nonresident alien part of the year he or she was alive.enough tax withheld or does not pay at any time during the year and you do not

enough estimated tax. choose to treat him or her as a resident Keeping up a home. To find out what is See the instructions for line 3. Also see alien. included in the cost of keeping up a home, Innocent Spouse Relief under General In- Check the box on line 4 only if you are see Pub. 501. formation, later. unmarried (or considered unmarried) and

If you used payments you receivedeither Test 1 or Test 2 applies.Nonresident aliens and dual-status aliens. under Temporary Assistance for Needy Generally, a husband and wife cannot file a Families (TANF) or other public assistanceTest 1. You paid over half the cost of keep-joint return if either spouse is a nonresident programs to pay part of the cost of keepinging up a home that was the main home foralien at any time during the year. However, up your home, you cannot count them asall of 2011 of your parent whom you canif you were a nonresident alien or a money you paid. However, you must in-claim as a dependent, except under a multi-dual-status alien and were married to a U.S. clude them in the total cost of keeping upple support agreement (see the line 6c in-citizen or resident alien at the end of 2011, your home to figure if you paid over halfstructions). Your parent did not have to liveyou may elect to be treated as a resident the cost.with you.alien and file a joint return. See Pub. 519

Married persons who live apart. Even iffor details. Test 2. You paid over half the cost of keep- you were not divorced or legally separateding up a home in which you lived and in at the end of 2011, you are considered un-which one of the following also lived for married if all of the following apply.more than half of the year (if half or less,Line 3 • You lived apart from your spouse forsee Exception to time lived with you). the last 6 months of 2011. Temporary ab-Married Filing Separately 1. Any person whom you can claim as a sences for special circumstances, such asdependent. But do not include:If you are married and file a separate return, for business, medical care, school, or mili-

you generally report only your own in- a. Your qualifying child whom you tary service, count as time lived in the come, exemptions, deductions, and credits. claim as your dependent because of the rule home. Generally, you are responsible only for the for Children of divorced or separated par- • You file a separate return from yourtax on your own income. Different rules ents in the line 6c instructions, spouse.apply to people in community property

b. Any person who is your dependent • You paid over half the cost of keepingstates; see Pub. 555. only because he or she lived with you for up your home for 2011.However, you will usually pay more tax all of 2011, or • Your home was the main home ofthan if you use another filing status for c. Any person you claimed as a depen- your child, stepchild, or foster child forwhich you qualify. Also, if you file a sepa- dent under a multiple support agreement. more than half of 2011 (if half or less, seerate return, you cannot take the student loan See the line 6c instructions. Exception to time lived with you, earlier).interest deduction, the tuition and fees de-

2. Your unmarried qualifying child whoduction, the education credits, or the earned • You can claim this child as your de- is not your dependent.income credit. You also cannot take the pendent or could claim the child except that

standard deduction if your spouse itemizes 3. Your married qualifying child who is the child’s other parent can claim him or deductions. not your dependent only because you can her under the rule for Children of divorced

- 13 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Lines 4 Through 6b

or separated parents in the line 6c instruc- Adopted child. An adopted child is always tions. treated as your own child. An adopted child Line 6b

includes a child lawfully placed with youAdopted child. An adopted child is al- Spousefor legal adoption.ways treated as your own child. An adopted child includes a child lawfully placed with Check the box on line 6b if either of theDependent. To find out if someone is youryou for legal adoption. following applies.dependent, see the instructions for line 6c.

Foster child. A foster child is any child 1. Your filing status is married filing placed with you by an authorized place- Exception to time lived with you. Tempo- jointly and your spouse cannot be claimedment agency or by judgment, decree, or rary absences by you or the child for special

as a dependent on another person’s return.other order of any court of competent juris- circumstances, such as school, vacation, 2. You were married at the end of 2011,diction. business, medical care, military service, or

your filing status is married filing sepa-detention in a juvenile facility, count as rately or head of household, and both of thetime lived in the home. Also see Kidnapped

child in the line 6c instructions, if applica- following apply.Line 5 ble. a. Your spouse had no income and is not

Qualifying Widow(er) With A child is considered to have lived with filing a return. you for all of 2011 if the child was born orDependent Child b. Your spouse cannot be claimed as a died in 2011 and your home was the child’s dependent on another person’s return.You can check the box on line 5 and use home for the entire time he or she wasjoint return tax rates for 2011 if all of the alive.following apply.

If your filing status is head of householdKeeping up a home. To find out what is• Your spouse died in 2009 or 2010 and and you check the box on line 6b, enter theincluded in the cost of keeping up a home,you did not remarry before the end of 2011. name of your spouse on the dotted line nextsee Pub. 501.• You have a child or stepchild whom to line 6b. Also, enter your spouse’s social

you claim as a dependent. This does not If you used payments you received security number in the space provided atinclude a foster child. under Temporary Assistance for Needy the top of your return. If you became di-• This child lived in your home for all of Families (TANF) or other public assistance vorced or legally separated during 2011, 2011. If the child did not live with you for programs to pay part of the cost of keeping you cannot take an exemption for your for-the required time, see Exception to time up your home, you cannot count them as

mer spouse.lived with you, later. money you paid. However, you must in- clude them in the total cost of keeping up• You paid over half the cost of keeping your home to figure if you paid over half Death of your spouse. If your spouse diedup your home. the cost. in 2011 and you did not remarry by the end• You could have filed a joint return

of 2011, check the box on line 6b if youwith your spouse the year he or she died, could have taken an exemption for youreven if you did not actually do so. spouse on the date of death. For other filingIf your spouse died in 2011, you cannot instructions, see Death of a Taxpayer underExemptionsfile as qualifying widow(er) with depen- General Information, later.dent child. Instead, see the instructions for You can deduct $3,700 on line 42 for each

line 2. exemption you can take.

Need more information or forms? Visit IRS.gov. - 14 -

2011 Form 1040—Line 6c

1. Do you have a child who meets the conditions to be yourLine 6c—Dependents qualifying child? Yes. Go to Step 2. No. Go to Step 4.Dependents and Qualifying Child for Child

Tax Credit Follow the steps below to find out if a person qualifies as your Is Your Qualifying Child YourStep 2 dependent, qualifies you to take the child tax credit, or both. If you Dependent?have more than four dependents, check the box to the left of line 6c and include a statement showing the information required in 1. Was the child a U.S. citizen, U.S. national, U.S. residentcolumns (1) through (4). alien, or a resident of Canada or Mexico? (See Pub. 519 for

the definition of a U.S. national or U.S. resident alien. If the child was adopted, see Exception to citizen test, later.)Do You Have a Qualifying Child?Step 1

Yes. Continue No. �

STOP

You cannot claim this child as a dependent. Go to Form

A qualifying child is a child who is your... 1040, line 7.

Son, daughter, stepchild, foster child, brother, sister, 2. Was the child married? stepbrother, stepsister, half brother, half sister, or a Yes. See Married No. Continue

� descendant of any of them (for example, your grandchild, person, later.

niece, or nephew)

3. Could you, or your spouse if filing jointly, be claimed as a dependent on someone else’s 2011 tax return? See Steps 1, 2, and 4.

AND

Yes. You cannot No. You can claim thiswas ... claim any dependents. child as a dependent. Com- Go to Form 1040, line plete Form 1040, line 6c,Under age 19 at the end of 2011 and younger than you 7. columns (1) through (3) for(or your spouse, if filing jointly)

this child. Then, go to Step or 3.

Under age 24 at the end of 2011, a student (defined later), and younger than you (or your spouse, if filing jointly)

Does Your Qualifying ChildStep 3 or Qualify You for the Child Tax

Any age and permanently and totally disabled (defined later) Credit?

1. Was the child under age 17 at the end of 2011? AND

Yes. Continue No. �

STOP

Who did not provide over half of his or her own support for This child is not a qualify- ing child for the child tax2011 (see Pub. 501) credit. Go to Form 1040, line 7.AND

2. Was the child a U.S. citizen, U.S. national, or U.S. resident alien? (See Pub. 519 for the definition of a U.S. national orWho is not filing a joint return for 2011 U.S. resident alien. If the child was adopted, see Exceptionor is filing a joint return for 2011 only as a claim for refund to citizen test, later.)(defined later)

Yes. This child is a No. STOP qualifying child for the This child is not a qualify-child tax credit. Check ing child for the child tax

AND

the box on Form 1040, credit. Go to Form 1040,line 6c, column (4). line 7.Who lived with you for more than half of 2011. If the child did not live with you for the required time, see Exception to

time lived with you, later.

If the child meets the conditions to be a qualifying child of any other person (other than your spouse if filing jointly) for 2011, see Qualifying child ofCAUTION

! more than one person, later.

(Continued)

- 15 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Line 6c

1. Does any person meet the conditions to be your qualifying relative?

Is Your Qualifying Relative YourStep 4 Yes. Continue No.

� STOPDependent?

Go to Form 1040, line 7.

2. Was your qualifying relative a U.S. citizen, U.S. national, A qualifying relative is a person who is your... U.S. resident alien, or a resident of Canada or Mexico? (See

Pub. 519 for the definition of a U.S. national or U.S. resi-Son, daughter, stepchild, foster child, or a descendant of any dent alien. If your qualifying relative was adopted, see Ex- of them (for example, your grandchild) ception to citizen test, later.)

or Yes. Continue No.

� STOP

Brother, sister, half brother, half sister, or a son or daughter You cannot claim this per-of any of them (for example, your niece or nephew) son as a dependent. Go to Form 1040, line 7.or

Father, mother, or an ancestor or sibling of either of them 3. Was your qualifying relative married? (for example, your grandmother, grandfather, aunt, or uncle)

Yes. See Married per- No. Continue �

or son, later.

Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, 4. Could you, or your spouse if filing jointly, be claimed as a

or sister-in-law dependent on someone else’s 2011 tax return? See Steps 1, 2, and 4.or

Yes. No. You can claim thisSTOPAny other person (other than your spouse) who lived with person as a dependent.You cannot claim anyyou all year as a member of your household if your Complete Form 1040, linedependents. Go torelationship did not violate local law. If the person did not 6c, columns (1) throughForm 1040, line 7.live with you for the required time, see Exception to time (3). Do not check the box lived with you, later on Form 1040, line 6c, col-

umn (4). AND

Definitions and Special RulesWho was not a qualifying child (see Step 1) of any taxpayer Adopted child. An adopted child is always treated as your ownfor 2011. For this purpose, a person is not a taxpayer if he or child. An adopted child includes a child lawfully placed with youshe is not required to file a U.S. income tax return and either for legal adoption.

does not file such a return or files only to get a refund of Adoption taxpayer identification numbers (ATINs). If you have awithheld income tax or estimated tax paid dependent who was placed with you for legal adoption and you do not know his or her SSN, you must get an ATIN for the dependent from the IRS. See Form W-7A for details. If the dependent is not a U.S. citizen or resident alien, apply for an ITIN instead, using Form

AND

W-7. Who had gross income of less than $3,700 in 2011. If the

Children of divorced or separated parents. A child will be treatedperson was permanently and totally disabled, see Exception to as the qualifying child or qualifying relative of his or her noncus- gross income test, later todial parent (defined later) if all of the following conditions apply.

1. The parents are divorced, legally separated, separated under a written separation agreement, or lived apart at all times during the last 6 months of 2011 (whether or not they are or were

AND

married). 2. The child received over half of his or her support for 2011For whom you provided over half of his or her support in

from the parents (and the rules on Multiple support agree-2011. But see Children of divorced or separated parents, ments, later, do not apply). Support of a child received from aMultiple support agreements, and Kidnapped child, later. parent’s spouse is treated as provided by the parent.

3. The child is in custody of one or both of the parents for more than half of 2011.

4. Either of the following applies.

a. The custodial parent signs Form 8332 or a substantially simi- lar statement that he or she will not claim the child as a dependent for 2011, and the noncustodial parent includes a copy of the form or statement with his or her return. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to include certain pages from the decree or agreement instead of Form 8332. See Post-1984 and pre-2009 decree or agreement and Post-2008 decree or agreement.

Need more information or forms? Visit IRS.gov. - 16 -

2011 Form 1040—Line 6c

b. A pre-1985 decree of divorce or separate maintenance or A person is considered to have lived with you for all of 2011 if written separation agreement between the parents provides the person was born or died in 2011 and your home was this that the noncustodial parent can claim the child as a depen- person’s home for the entire time he or she was alive in 2011. dent, and the noncustodial parent provides at least $600 for support of the child during 2011. Foster child. A foster child is any child placed with you by an

authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.If conditions (1) through (4) apply, only the noncustodial parent

can claim the child for purposes of the dependency exemption (line Kidnapped child. If your child is presumed by law enforcement6c) and the child tax credits (lines 51 and 65). However, this special authorities to have been kidnapped by someone who is not a familyrule does not apply to head of household filing status, the credit for member, you may be able to take the child into account in determin-child and dependent care expenses, the exclusion for dependent ing your eligibility for head of household or qualifying widow(er)care benefits, the earned income credit, or the health coverage tax filing status, the dependency exemption, the child tax credit, and thecredit. See Pub. 501 for details. earned income credit (EIC). For details, see Pub. 501 (Pub. 596 forCustodial and noncustodial parents. The custodial parent is the the EIC).parent with whom the child lived for the greater number of nights in

2011. The noncustodial parent is the other parent. If the child was Married person. If the person is married and files a joint return,with each parent for an equal number of nights, the custodial parent you cannot claim that person as your dependent. Go to Form 1040,is the parent with the higher adjusted gross income. See Pub. 501 line 7. However, if the person is married but does not file a jointfor an exception for a parent who works at night, rules for a child return or files a joint return only as a Claim for refund (definedwho is emancipated under state law, and other details. earlier) and no tax liability would exist for either spouse if they filed

Post-1984 and pre-2009 decree or agreement. The decree or separate returns, you may be able to claim him or her as a depen- agreement must state all three of the following. dent. Go to Step 2, question 3 (for a qualifying child) or Step 4,

question 4 (for a qualifying relative).1. The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. Multiple support agreements. If no one person contributed over

half of the support of your relative (or a person who lived with you2. The other parent will not claim the child as a dependent. all year as a member of your household) but you and another3. The years for which the claim is released. person(s) provided more than half of your relative’s support, special rules may apply that would treat you as having provided over half ofThe noncustodial parent must include all of the following pages the support. For details, see Pub. 501.from the decree or agreement.

• Cover page (include the other parent’s SSN on that page). Permanently and totally disabled. A person is permanently and totally disabled if, at any time in 2011, the person cannot engage in• The pages that include all the information identified in (1) any substantial gainful activity because of a physical or mentalthrough (3) above. condition and a doctor has determined that this condition has lasted• Signature page with the other parent’s signature and date of or can be expected to last continuously for at least a year or can beagreement. expected to lead to death.

You must include the required information even if you Qualifying child of more than one person. Even if a child meets thefiled it with your return in an earlier year. conditions to be the qualifying child of more than one person, only

CAUTION !

one person can claim the child as a qualifying child for all of the following tax benefits, unless the special rule for Children of di-

Post-2008 decree or agreement. If the divorce decree or separa- vorced or separated parents, described earlier, applies. tion agreement went into effect after 2008, the noncustodial parent

1. Dependency exemption (line 6c).cannot include pages from the decree or agreement instead of Form 8332. The custodial parent must sign either Form 8332 or a substan- 2. Child tax credits (lines 51 and 65). tially similar statement the only purpose of which is to release the 3. Head of household filing status (line 4).custodial parent’s claim to an exemption for a child, and the non-

4. Credit for child and dependent care expenses (line 48).custodial parent must include a copy with his or her return. The 5. Exclusion for dependent care benefits (Form 2441, Part III).form or statement must release the custodial parent’s claim to the

child without any conditions. For example, the release must not 6. Earned income credit (lines 64a and 64b). depend on the noncustodial parent paying support.

No other person can take any of the six tax benefits listed above Release of exemption revoked. A custodial parent who has re- unless he or she has a different qualifying child. If you and any

voked his or her previous release of a claim to exemption for a child other person can claim the child as a qualifying child, the following must include a copy of the revocation with his or her return. For rules apply. details, see Form 8332. • If only one of the persons is the child’s parent, the child is

treated as the qualifying child of the parent.Claim for refund. A claim for refund is a return filed only to get a refund of withheld income tax or estimated tax paid. A return is not • If the parents do not file a joint return together but both parents a claim for refund if the earned income credit or any other similar claim the child as a qualifying child, the IRS will treat the refundable credit is claimed on it. child as the qualifying child of the parent with whom the child

lived for the longer period of time in 2011. If the child lived with each parent for the same amount of time, the IRS willException to citizen test. If you are a U.S. citizen or U.S. national treat the child as the qualifying child of the parent who had theand your adopted child lived with you all year as a member of your higher adjusted gross income (AGI) for 2011.household, that child meets the requirement to be a U.S. citizen in

Step 2, question 1; Step 3, question 2; and Step 4, question 2. • If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the

Exception to gross income test. If your relative (including a person highest AGI for 2011. who lived with you all year as a member of your household) is • If a parent can claim the child as a qualifying child but nopermanently and totally disabled (defined later), certain income for parent does so claim the child, the child is treated as theservices performed at a sheltered workshop may be excluded for qualifying child of the person who had the highest AGI forthis test. For details, see Pub. 501. 2011, but only if that person’s AGI is higher than the highest

AGI of any parent of the child who can claim the child.Exception to time lived with you. Temporary absences by you or the other person for special circumstances, such as school, vacation, Example. Your daughter meets the conditions to be a qualifying business, medical care, military service, or detention in a juvenile child for both you and your mother. Your daughter does not meet facility, count as time the person lived with you. Also see Children the conditions to be a qualifying child of any other person, includ- of divorced or separated parents, earlier, or Kidnapped child, later. ing her other parent. Under the rules just described, you can claim

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2011 Form 1040—Line 6c

your daughter as a qualifying child for all of the six tax benefits just dependent’s social security card is not correct or you need to get an listed for which you otherwise qualify. Your mother cannot claim SSN for your dependent, contact the Social Security Administra- any of those six tax benefits unless she has a different qualifying tion. See Social Security Number (SSN), earlier. If your dependent child. However, if your mother’s AGI is higher than yours and you will not have a number by the date your return is due, see What if do not claim your daughter as a qualifying child, your daughter is You Cannot File on Time? earlier. the qualifying child of your mother.

If your dependent child was born and died in 2011 and you doFor more details and examples, see Pub. 501. not have an SSN for the child, enter “Died” in column (2) and If you will be claiming the child as a qualifying child, go to Step include a copy of the child’s birth certificate, death certificate, or

2. Otherwise, stop; you cannot claim any benefits based on this hospital records. The document must show the child was born alive. child. Go to Form 1040, line 7.

Student. A student is a child who during any part of 5 calendar Social security number. You must enter each dependent’s social months of 2011 was enrolled as a full-time student at a school, or security number (SSN). Be sure the name and SSN entered agree took a full-time, on-farm training course given by a school or a with the dependent’s social security card. Otherwise, at the time we state, county, or local government agency. A school includes a process your return, we may disallow the exemption claimed for the technical, trade, or mechanical school. It does not include an dependent and reduce or disallow any other tax benefits (such as the on-the-job training course, correspondence school, or school offer- child tax credit) based on that dependent. If the name or SSN on the ing courses only through the Internet.

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2011 Form 1040—Line 7

ning of the case. Also, you (or the trustee, if less than $1,700 in 2011. Also, enter one is appointed) must allocate between “HSH” and the amount not reported onIncome you and the bankruptcy estate the wages, Form W-2 on the dotted line next to line 7.

Generally, you must report all income ex- salary, or other compensation and withheld • Tip income you did not report to yourcept income that is exempt from tax by law. income tax reported to you on Form W-2. employer. This should include any allo-For details, see the following instructions, A similar allocation is required for income cated tips shown in box 8 on your Form(s)especially the instructions for lines 7 and withheld income tax reported to you on W-2 unless you can prove that your unre-through 21. Also see Pub. 525. Forms 1099. You must also include a state- ported tips are less than the amount in box ment that indicates you filed a chapter 11 8. Allocated tips are not included as incomeForeign-Source Income case and that explains how income and in box 1. See Pub. 531 for more details.

You must report unearned income, such as withheld income tax reported to you on Also include the value of any noncash tips interest, dividends, and pensions, from Forms W-2 and 1099 are allocated between you received, such as tickets, passes, or sources outside the United States unless ex- you and the estate. For more details, includ- other items of value. Although you do not empt by law or a tax treaty. You must also ing acceptable allocation methods, see No- report these noncash tips to your employer, report earned income, such as wages and tice 2006-83, 2006-40 I.R.B. 596, available you must report them on line 7. tips, from sources outside the United at

You may owe social securityStates. www.irs.gov/irb/2006-40_IRB/ar12.html. and Medicare or railroad retire-If you worked abroad, you may be able ment (RRTA) tax on unre-Community Property Statesto exclude part or all of your foreign earned CAUTION

! ported tips. See the instructionsCommunity property states are Arizona,income. For details, see Pub. 54 and Form for line 57.California, Idaho, Louisiana, Nevada, New2555 or 2555-EZ.

Mexico, Texas, Washington, and Wiscon- • Dependent care benefits, whichForeign retirement plans. If you were a sin. If you and your spouse lived in a com- should be shown in box 10 of your Form(s)beneficiary of a foreign retirement plan, munity property state, you must usually W-2. But first complete Form 2441 to see ifyou may have to report the undistributed follow state law to determine what is com- you can exclude part or all of the benefits.income earned in your plan. However, if munity income and what is separate in- • Employer-provided adoption benefits,you were the beneficiary of a Canadian reg- come. For details, see Pub. 555. which should be shown in box 12 of youristered retirement plan, see Form 8891 to Form(s) W-2 with code T. But see the In-find out if you can elect to defer tax on the Nevada, Washington, and California structions for Form 8839 to find out if youundistributed income. domestic partners. A registered domestic can exclude part or all of the benefits. Youpartner in Nevada, Washington, or Califor-Report distributions from foreign pen- may also be able to exclude amounts if younia (or a person in California who is mar-sion plans on lines 16a and 16b. adopted a child with special needs and theried to a person of the same sex) generally adoption became final in 2011.Foreign accounts and trusts. You must must report half the combined community

complete Part III of Schedule B if you: income of the individual and his or her • Scholarship and fellowship grants not domestic partner (or California same-sex reported on Form W-2. Also, enter “SCH”• Had a foreign account, or spouse). See Pub. 555 and the recent devel- and the amount on the dotted line next to• Received a distribution from, or were opments at www.irs.gov/pub555. line 7. However, if you were a degree can-a grantor of, or a transferor to, a foreign

didate, include on line 7 only the amountstrust. Rounding Off to Whole you used for expenses other than tuition If you had foreign financial assets in and course-related expenses. For example,Dollars

2011, you may have to file new Form 8938. amounts used for room, board, and travelYou can round off cents to whole dollars onCheck www.irs.gov/form8938 for details. must be reported on line 7.your return and schedules. If you do round • Excess salary deferrals. The amountto whole dollars, you must round allChapter 11 Bankruptcy deferred should be shown in box 12 of youramounts. To round, drop amounts under 50Cases Form W-2, and the “Retirement plan” boxcents and increase amounts from 50 to 99 in box 13 should be checked. If the totalIf you are a debtor in a chapter 11 bank- cents to the next dollar. For example, $1.39 amount you (or your spouse if filingruptcy case, income taxable to the bank- becomes $1 and $2.50 becomes $3. jointly) deferred for 2011 under all plansruptcy estate and reported on the estate’s

If you have to add two or more amounts was more than $16,500 (excludingincome tax return includes: to figure the amount to enter on a line, catch-up contributions as explained be-• Earnings from services you performed include cents when adding the amounts and low), include the excess on line 7. Thisafter the beginning of the case (both wages round off only the total. limit is (a) $11,500 if you only haveand self-employment income), and

SIMPLE plans, or (b) $19,500 for section• Income from property described in 403(b) plans if you qualify for the 15-yearsection 541 of title 11 of the U.S. Code that rule in Pub. 571. Although designated Rothyou either owned when the case began or Line 7 contributions are subject to this limit, dothat you acquired after the case began and not include the excess attributable to suchWages, Salaries, Tips, etc.before the case was closed, dismissed, or contributions on line 7. They are alreadyconverted to a case under a different chap- Enter the total of your wages, salaries, tips, included as income in box 1 of your Formter. etc. If a joint return, also include your W-2. spouse’s income. For most people, theBecause this income is taxable to the

A higher limit may apply to participantsamount to enter on this line should beestate, do not include this income on your in section 457(b) deferred compensationshown in box 1 of their Form(s) W-2. Butown individual income tax return. The only plans for the 3 years before retirement age.the following types of income must also beexception is for purposes of figuring your Contact your plan administrator for moreincluded in the total on line 7.self-employment tax. For that purpose, you information.must take into account all your self-em- • Wages received as a household em-

ployment income for the year from services ployee for which you did not receive a If you were age 50 or older at the end of performed both before and after the begin- Form W-2 because your employer paid you 2011, your employer may have allowed an

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2011 Form 1040—Lines 7 Through 9b

additional deferral (catch-up contributions) Interest credited in 2011 on deposits that quired to be shown on line 9a. Qualified of up to $5,500 ($2,500 for section you could not withdraw because of the dividends are eligible for a lower tax rate 401(k)(11) and SIMPLE plans). This addi- bankruptcy or insolvency of the financial than other ordinary income. Generally, tional deferral amount is not subject to the institution may not have to be included in these dividends are shown in box 1b of overall limit on elective deferrals. your 2011 income. For details, see Form(s) 1099-DIV. See Pub. 550 for the

Pub. 550. definition of qualified dividends if you re- ceived dividends not reported on FormYou cannot deduct the amount

If you get a 2011 Form 1099-DIV.deferred. It is not included as 1099-INT for U.S. savingsincome in box 1 of your Form

Exception. Some dividends may be re-bond interest that includesCAUTION !

W-2. TIP

ported as qualified dividends in box 1b ofamounts you reported before Form 1099-DIV but are not qualified divi-2011, see Pub. 550.• Disability pensions shown on Form dends. These include:1099-R if you have not reached the mini-

• Dividends you received as a nominee.mum retirement age set by your employer. See the Schedule B instructions.But see Insurance Premiums for Retired Line 8b

Public Safety Officers in the instructions • Dividends you received on any share for lines 16a and 16b. Disability pensions of stock that you held for less than 61 daysTax-Exempt Interest received after you reach minimum retire- during the 121-day period that began 60If you received any tax-exempt interest,ment age and other payments shown on days before the ex-dividend date. Thesuch as from municipal bonds, each payerForm 1099-R (other than payments from an ex-dividend date is the first date followingshould send you a Form 1099-INT. YourIRA*) are reported on lines 16a and 16b. the declaration of a dividend on which thetax-exempt interest, including anyPayments from an IRA are reported on purchaser of a stock is not entitled to re-exempt-interest dividends from a mutuallines 15a and 15b. ceive the next dividend payment. Whenfund or other regulated investment com-

counting the number of days you held the• Corrective distributions from a retire- pany, should be included in box 8 of Form stock, include the day you disposed of thement plan shown on Form 1099-R of ex- 1099-INT. Enter the total on line 8b. Do not stock but not the day you acquired it. Seecess salary deferrals and excess include interest earned on your IRA, health the examples that follow. Also, whencontributions (plus earnings). But do not savings account, Archer or Medicare Ad- counting the number of days you held theinclude distributions from an IRA* on line vantage MSA, or Coverdell education sav- stock, you cannot count certain days during7. Instead, report distributions from an IRA ings account. which your risk of loss was diminished. Seeon lines 15a and 15b. Pub. 550 for more details.• Wages from Form 8919, line 6.

• Dividends attributable to periods to- *This includes a Roth, SEP, or SIMPLE IRA. Line 9a taling more than 366 days that you received

on any share of preferred stock held for lessOrdinary DividendsWere You a Statutory Employee? than 91 days during the 181-day period that began 90 days before the ex-dividend date.Each payer should send you a FormIf you were, the “Statutory employee” box When counting the number of days you1099-DIV. Enter your total ordinary divi-in box 13 of your Form W-2 should be held the stock, you cannot count certaindends on line 9a. This amount should bechecked. Statutory employees include days during which your risk of loss wasshown in box 1a of Form(s) 1099-DIV.full-time life insurance salespeople, certain diminished. See Pub. 550 for more details.agent or commission drivers and traveling You must fill in and attach Schedule B if Preferred dividends attributable to periodssalespeople, and certain homeworkers. If the total is over $1,500 or you received, as a totaling less than 367 days are subject to theyou have related business expenses to de- nominee, ordinary dividends that actually 61-day holding period rule just described.duct, report the amount shown in box 1 of belong to someone else.

• Dividends on any share of stock to theyour Form W-2 on Schedule C or C-EZ Nondividend Distributions extent that you are under an obligation (in-along with your expenses. cluding a short sale) to make related pay-Some distributions are a return of your cost

Missing or Incorrect Form W-2? ments with respect to positions in(or other basis). They will not be taxed until substantially similar or related property.you recover your cost (or other basis). YouYour employer is required to provide or

must reduce your cost (or other basis) by • Payments in lieu of dividends, butsend Form W-2 to you no later than these distributions. After you get back all of only if you know or have reason to knowJanuary 31, 2012. If you do not receive it your cost (or other basis), you must report that the payments are not qualified divi-by early February, use TeleTax topic 154 to these distributions as capital gains on dends.find out what to do. Even if you do not get a Schedule D. For details, see Pub. 550.Form W-2, you must still report your earn- Example 1. You bought 5,000 shares of

ings on line 7. If you lose your Form W-2 XYZ Corp. common stock on July 8, 2011.Dividends on insurance policies or it is incorrect, ask your employer for a XYZ Corp. paid a cash dividend of 10 centsare a partial return of the premi- new one. per share. The ex-dividend date was Julyums you paid. Do not report

TIP 15, 2011. Your Form 1099-DIV from XYZthem as dividends. Include Corp. shows $500 in box 1a (ordinary divi-them in income on line 21 only if they dends) and in box 1b (qualified dividends).exceed the total of all net premiums youLine 8a However, you sold the 5,000 shares on Au-paid for the contract. gust 11, 2011. You held your shares ofTaxable Interest XYZ Corp. for only 34 days of the 121-day

Each payer should send you a Form period (from July 9, 2011, through AugustLine 9b1099-INT or Form 1099-OID. Enter your 11, 2011). The 121-day period began on total taxable interest income on line 8a. But May 16, 2011 (60 days before the ex-divi-Qualified Dividendsyou must fill in and attach Schedule B if the dend date), and ended on September 13, total is over $1,500 or any of the other Enter your total qualified dividends on 2011. You have no qualified dividends conditions listed at the beginning of the line 9b. Qualified dividends are also in- from XYZ Corp. because you held the Schedule B instructions apply to you. cluded in the ordinary dividend total re- XYZ stock for less than 61 days.

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State and Local Income Tax Refund Worksheet—Line 10 Keep for Your Records

STOP

2011 Form 1040—Lines 9b and 10

to apply part or all of the refund to yourExample 2. Assume the same facts as in you held the ABC Mutual Fund stock for 2011 estimated state or local income tax,Example 1 except that you bought the stock less than 61 days. the amount applied is treated as received inon July 14, 2011 (the day before the ex-div- 2011. If the refund was for a tax you paid inidend date), and you sold the stock on Sep- Use the Qualified Dividends 2010 and you deducted state and local in-tember 15, 2011. You held the stock for 63 and Capital Gain Tax Work- come taxes on line 5 of your 2010 Scheduledays (from July 15, 2011, through Septem- sheet or the Schedule D Tax

TIP A, use the worksheet below to see if any ofber 15, 2011). The $500 of qualified divi- Worksheet, whichever applies, your refund is taxable.dends shown in box 1b of Form 1099-DIV to figure your tax. See the instructions for

are all qualified dividends because you held line 44 for details. Exception. See Itemized Deduction Re-the stock for 61 days of the 121-day period coveries in Pub. 525 instead of using the(from July 15, 2011, through September worksheet below if any of the following13, 2011). Line 10 applies.

Example 3. You bought 10,000 shares 1. You received a refund in 2011 that isTaxable Refunds, Credits, orof ABC Mutual Fund common stock on

for a tax year other than 2010.Offsets of State and LocalJuly 8, 2011. ABC Mutual Fund paid a cash 2. You received a refund other than andividend of 10 cents a share. The ex-divi- Income Taxes

income tax refund, such as a general salesdend date was July 15, 2011. The ABC None of your refund is taxable tax or real property tax refund, in 2011 ofMutual Fund advises you that the portion of if, in the year you paid the tax, an amount deducted or credit claimed in anthe dividend eligible to be treated as quali- you either (a) did not itemize earlier year.fied dividends equals 2 cents per share.

TIP deductions, or (b) elected to de- 3. The amount on your 2010 Form 1040,Your Form 1099-DIV from ABC Mutual duct state and local general sales taxes in- line 42, was more than the amount on yourFund shows total ordinary dividends of stead of state and local income taxes. 2010 Form 1040, line 41.$1,000 and qualified dividends of $200.

However, you sold the 10,000 shares on 4. You had taxable income on yourIf you received a refund, credit, or offset August 11, 2011. You have no qualified 2010 Form 1040, line 43, but no tax onof state or local income taxes in 2011, you

your Form 1040, line 44, because of the 0%dividends from ABC Mutual Fund because may receive a Form 1099-G. If you chose

��������� � ��� � � Be sure you have read the Exception in the instructions for this line to see if you can use this worksheet instead of Pub. 525 to figure if any of your refund is taxable.

1. Enter the income tax refund from Form(s) 1099-G (or similar statement). But do not enter more than the amount of your state and local income taxes shown on your 2010 Schedule A, line 5 . . . . . . . . . . . 1.

2. Enter your total itemized deductions from your 2010 Schedule A, line 29 . . . . . . . . . . . . 2.

Note. If the filing status on your 2010 Form 1040 was married filing separately and your spouse itemized deductions in 2010, skip lines 3 through 7, enter the amount from line 2 on line 8, and go to line 9.

3. Enter the amount shown below for the filing status claimed on your 2010 Form 1040. • Single or married filing separately—$5,700

}• Married filing jointly or qualifying widow(er)—$11,400• Head of household—$8,400 3. 4. Did you fill in line 39a on your 2010 Form 1040?

No. Enter -0-. } Yes. Multiply the number in the box on line 39a of your 2010Form 1040 by $1,100 ($1,400 if your 2010 filing status was single or head of household). 4.

5. Enter any net disaster loss from your 2010 Form 4684, line 17 . . . . . . . . 5. 6. Enter any new motor vehicle taxes shown on your 2010 Schedule A,

line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Add lines 3, 4, 5, and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 8. Is the amount on line 7 less than the amount on line 2?

No. STOP None of your refund is taxable. Yes. Subtract line 7 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

9. Taxable part of your refund. Enter the smaller of line 1 or line 8 here and on Form 1040, line 10 . . . 9.

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Page 22 of 100 of Instructions 1040 13:56 - 28-NOV-2011

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2011 Form 1040—Lines 10 Through 15b

tax rate on net capital gain and qualified • A capital loss carryover from 2010, • IRA to a qualified plan other than an dividends in certain situations. IRA.• A gain from Form 2439 or 6252 or

5. Your 2010 state and local income tax Part I of Form 4797, Also, enter “Rollover” next to line 15b. refund is more than your 2010 state and • A gain or loss from Form 4684, 6781, If the total distribution was rolled over in a local income tax deduction minus the or 8824, or qualified rollover, enter -0- on line 15b. If amount you could have deducted as your the total distribution was not rolled over in• A gain or loss from a partnership, S2010 state and local general sales taxes. a qualified rollover, enter the part not rolledcorporation, estate, or trust.

6. You made your last payment of 2010 over on line 15b unless Exception 2 appliesIf Exception 1 applies, enter your totalestimated state or local income tax in 2011. to the part not rolled over. Generally, acapital gain distributions (from box 2a of7. You owed alternative minimum tax in qualified rollover must be made within 60Form(s) 1099-DIV) on line 13 and check2010. days after the day you received the distribu-the box on that line. If you received capital 8. You could not use the full amount of tion. For more details on rollovers, see Pub.gain distributions as a nominee (that is,

credits you were entitled to in 2010 because 590.they were paid to you but actually belong to the total credits were more than the amount someone else), report on line 13 only the If you rolled over the distribution into ashown on your 2010 Form 1040, line 46. amount that belongs to you. Include a state- qualified plan other than an IRA or you

9. You could be claimed as a dependent ment showing the full amount you received made the rollover in 2012, include a state- by someone else in 2010. and the amount you received as a nominee. ment explaining what you did.

See the Schedule B instructions for filing10. You received a refund because of a Exception 2. If any of the following apply,requirements for Forms 1099-DIV andjointly filed state or local income tax return,

1096. enter the total distribution on line 15a andbut you are not filing a joint 2011 Form see Form 8606 and its instructions to figure1040 with the same person. If you do not have to file Sched- the amount to enter on line 15b.

ule D, use the Qualified Divi- 1. You received a distribution from andends and Capital Gain Tax

TIP IRA (other than a Roth IRA) and you madeWorksheet in the line 44 in-Line 11 nondeductible contributions to any of yourstructions to figure your tax. traditional or SEP IRAs for 2011 or an ear-Alimony Received lier year. If you made nondeductible contri-

Enter amounts received as alimony or sepa- butions to these IRAs for 2011, also seeLine 14rate maintenance. You must let the person Pub. 590. who made the payments know your social 2. You received a distribution from aOther Gains or (Losses)security number. If you do not, you may

Roth IRA. But if either (a) or (b) belowhave to pay a penalty. For more details, see If you sold or exchanged assets used in a applies, enter -0- on line 15b; you do notPub. 504. trade or business, see the Instructions for have to see Form 8606 or its instructions. Form 4797.

a. Distribution code T is shown in box 7 of Form 1099-R and you made a contribu-Line 12 tion (including a conversion) to a Roth IRALines 15a and 15b for 2006 or an earlier year.Business Income or (Loss)

b. Distribution code Q is shown in box 7If you operated a business or practiced your IRA Distributions of Form 1099-R.profession as a sole proprietor, report your You should receive a Form 1099-R show-income and expenses on Schedule C or 3. You converted part or all of a tradi-ing the total amount of any distributionC-EZ. tional, SEP, or SIMPLE IRA to a Roth IRAfrom your IRA before income tax or other in 2011.deductions were withheld. This amount

4. You had a 2010 or 2011 IRA contri-should be shown in box 1 of Form 1099-R. bution returned to you, with the relatedLine 13 Unless otherwise noted in the line 15a and earnings or less any loss, by the due date15b instructions, an IRA includes a tradi-Capital Gain or (Loss) (including extensions) of your tax returntional IRA, Roth IRA, simplified employee for that year.If you had a capital gain or loss, you must pension (SEP) IRA, and a savings incentive

complete and attach Form 8949 and Sched- match plan for employees (SIMPLE) IRA. 5. You made excess contributions to ule D. Except as provided below, leave line 15a your IRA for an earlier year and had them

blank and enter the total distribution (from returned to you in 2011.Exception 1. You do not have to file Form Form 1099-R, box 1) on line 15b. 6. You recharacterized part or all of a8949 or Schedule D if both of the following

contribution to a Roth IRA as a traditionalapply. If you converted part or all of an IRA to IRA contribution, or vice versa.a Roth IRA in 2010 and did not elect to1. You have no capital losses, and your

report the taxable amount on your 2010only capital gains are capital gain distribu- Exception 3. If the distribution is a quali-return, you generally must report half of ittions from Form(s) 1099-DIV, box 2a (or fied charitable distribution (QCD), enteron your 2011 return and the rest on yoursubstitute statements). the total distribution on line 15a. If the total2012 return. See 2010 Roth IRA conver-2. None of the Form(s) 1099-DIV (or amount distributed is a QCD, enter -0- onsions, later.substitute statements) have an amount in line 15b. If only part of the distribution is abox 2b (unrecaptured section 1250 gain), Exception 1. Enter the total distribution on QCD, enter the part that is not a QCD onbox 2c (section 1202 gain), or box 2d (col- line 15a if you rolled over part or all of the line 15b unless Exception 2 applies to thatlectibles (28%) gain).

distribution from one: part. Enter “QCD” next to line 15b. • IRA to another IRA of the same typeException 2. You must file Schedule D, A QCD is a distribution made directly

(for example, from one traditional IRA tobut generally do not have to file Form by the trustee of your IRA (other than an another traditional IRA),8949, if Exception 1 does not apply and ongoing SEP or SIMPLE IRA) to an organ-

your only capital gains and losses are: • SEP or SIMPLE IRA to a traditional ization eligible to receive tax-deductible • Capital gain distributions, IRA, or contributions (with certain exceptions).

Need more information or forms? Visit IRS.gov. - 22 -

2011 Form 1040—Lines 15b Through 16b

You must have been at least age 701⁄2 when 2010 and did not elect to report the taxable 2010) and did not elect to report the taxable the distribution was made. amount on your 2010 return, include on amount on your 2010 return, you generally

line 15b the amount from your 2010 Form must report half of it on your 2011 returnGenerally, your total QCDs for the year 8606, line 20a. However, you may have to and the rest on your 2012 return. See 2010cannot be more than $100,000. (On a joint include a different amount on line 15b if Roth IRA rollovers, or 2010 in-plan rollo-return, your spouse can also have a QCD of either of the following applies. vers, whichever applies, later.up to $100,000.) If you elected to treat a

• You received a distribution from aJanuary 2011 QCD as made in 2010, report Fully Taxable Pensions and Roth IRA in 2010 or the owner of the Rothit on your 2011 return like any other 2011 Annuities IRA died in 2011. See Pub. 590 to figureQCD, as just described. However, if you

Your payments are fully taxable if (a) youthe amount to include on line 15b.also made another 2011 QCD and the total did not contribute to the cost (see Cost,was more than $100,000 per spouse, attach • You received a distribution from a later) of your pension or annuity, or (b) youa brief explanation. For example: “Line Roth IRA in 2011. Use Form 8606 to figure got your entire cost back tax free before15b – Spouse One’s 2010 QCD $75,000; the amount to include on line 15b. 2011. But see Insurance Premiums for Re-Spouse One’s 2011 QCD $70,000.” tired Public Safety Officers, later. If yourMore than one distribution. If you (or

The amount of the QCD is limited to the pension or annuity is fully taxable, enter theyour spouse if filing jointly) received more amount that would otherwise be included in total pension or annuity payments (fromthan one distribution, figure the taxable your income. If your IRA includes nonde- Form(s) 1099-R, box 1) on line 16b; do notamount of each distribution and enter the ductible contributions, the distribution is make an entry on line 16a.total of the taxable amounts on line 15b. first considered to be paid out of otherwise Enter the total amount of those distribu- Fully taxable pensions and annuitiestaxable income. tions on line 15a. also include military retirement pay shown

on Form 1099-R. For details on militaryYou cannot claim a charitable You may have to pay an addi- disability pensions, see Pub. 525. If youcontribution deduction for any tional tax if (a) you received an received a Form RRB-1099-R, see QCD not included in your in- early distribution from yourCAUTION !

Pub. 575 to find out how to report yourcome. CAUTION !

IRA and the total was not rolled benefits.over, or (b) you were born before July 1,Exception 4. If the distribution is a health Partially Taxable Pensions and1940, and received less than the minimumsavings account (HSA) funding distribu-

required distribution from your traditional, Annuitiestion (HFD), enter the total distribution on SEP, and SIMPLE IRAs. See the instruc-line 15a. If the total amount distributed is Enter the total pension or annuity payments tions for line 58 for details.an HFD and you elect to exclude it from (from Form 1099-R, box 1) on line 16a. If

income, enter -0- on line 15b. If only part of your Form 1099-R does not show the tax-More information. For more informationthe distribution is an HFD and you elect to able amount, you must use the Generalabout IRAs, see Pub. 590.exclude that part from income, enter the Rule explained in Pub. 939 to figure the part that is not an HFD on line 15b unless taxable part to enter on line 16b. But if your Exception 2 applies to that part. Enter annuity starting date (defined later) was af- “HFD” next to line 15b. Lines 16a and 16b ter July 1, 1986, see Simplified Method,

later, to find out if you must use that An HFD is a distribution made directly Pensions and Annuities method to figure the taxable part.by the trustee of your IRA (other than an You should receive a Form 1099-R show-ongoing SEP or SIMPLE IRA) to your You can ask the IRS to figure the tax- ing the total amount of your pension andHSA. If eligible, you generally can elect to able part for you for a $1,000 fee. For de- annuity payments before income tax orexclude an HFD from your income once in tails, see Pub. 939. other deductions were withheld. Thisyour lifetime. You cannot exclude more

If your Form 1099-R shows a taxableamount should be shown in box 1 of Formthan the limit on HSA contributions or amount, you can report that amount on 1099-R. Pension and annuity payments in-more than the amount that would otherwise line 16b. But you may be able to report aclude distributions from 401(k), 403(b),be included in your income. If your IRA lower taxable amount by using the Generaland governmental 457(b) plans. Rolloversincludes nondeductible contributions, the Rule or the Simplified Method or if theand lump-sum distributions are explainedHFD is first considered to be paid out of exclusion for retired public safety officers,later. Do not include the following pay-otherwise taxable income. See Pub. 969 for discussed next, applies.ments on lines 16a and 16b. Instead, reportdetails.

them on line 7. Insurance Premiums for RetiredThe amount of an HFD reduces • Disability pensions received before Public Safety Officersthe amount you can contribute you reach the minimum retirement age setto your HSA for the year. If you If you are an eligible retired public safety by your employer.CAUTION

! fail to maintain eligibility for an officer (law enforcement officer,

• Corrective distributions (includingHSA for the 12 months following the firefighter, chaplain, or member of a rescue any earnings) of excess salary deferrals ormonth of the HFD, you may have to report squad or ambulance crew), you can elect to excess contributions to retirement plans.the HFD as income and pay an additional exclude from income distributions made The plan must advise you of the year(s) thetax. See Form 8889, Part III. from your eligible retirement plan that are distributions are includible in income. used to pay the premiums for coverage byMore than one exception applies. If more an accident or health plan or a long-termthan one exception applies, include a state- Attach Form(s) 1099-R to care insurance contract. You can do thisment showing the amount of each excep- Form 1040 if any federal only if you retired because of disability ortion, instead of making an entry next to line income tax was withheld. because you reached normal retirement TIP

15b. For example: “Line 15b – $1,000 age. The premiums can be for coverage forRollover and $500 HFD.” But you do not If you rolled over part or all of a quali- you, your spouse, or dependents. The dis-need to attach a statement if only Exception fied retirement plan (other than a desig- tribution must be from a plan maintained2 and one other exception apply. nated Roth account) to a Roth IRA in 2010 by the employer from which you retired as 2010 Roth IRA conversions. If you con- (or you rolled over part or all of a 401(k) or a public safety officer. Also, the distribu- verted part or all of an IRA to a Roth IRA in 403(b) plan to a designated Roth account in tion must be made directly from the plan to

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Simplified Method Worksheet—Lines 16a and 16b Keep for Your Records

Before you begin: If you are the beneficiary of a deceased employee or former employee who died before August 21, 1996, include any death benefit exclusion that you are entitled to (up to $5,000) in the amount entered on line 2 below.

Note. If you had more than one partially taxable pension or annuity, figure the taxable part of each separately. Enter the total of the taxable parts on Form 1040, line 16b. Enter the total pension or annuity payments received in 2011 on Form 1040, line 16a.

1.

Enter the total pension or annuity payments from Form 1099-R, box 1. Also, enter this amount on Form 1040, line 16a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter your cost in the plan at the annuity starting date . . . . . . . . . . . 2.

Note. If you completed this worksheet last year, skip line 3 and enter the amount from line 4 of last year’s worksheet on line 4 below (even if the amount of your pension or annuity has changed). Otherwise, go to line 3.

3.

Enter the appropriate number from Table 1 below. But if your annuity starting date was after 1997 and the payments are for your life and that of your beneficiary, enter the appropriate number from Table 2 below . . . . . . . . . . . . . . . . . . . 3.

4. Divide line 2 by the number on line 3 . . . . . . . . . . . . . . . . 4.

5.

Multiply line 4 by the number of months for which this year’s payments were made. If your annuity starting date was before 1987, skip lines 6 and 7 and enter this amount on line 8. Otherwise, go to line 6 . . . . . . . . . . . . . . . . . . . . 5.

6.

Enter the amount, if any, recovered tax free in years after 1986. If you completed this worksheet last year, enter the amount from line 10 of last year’s worksheet . . . . . 6.

7. Subtract line 6 from line 2 . . . . . . . . . . . . . . . . . . . 7. 8. Enter the smaller of line 5 or line 7 . . . . . . . . . . . . . . . . . . . . . . . . 8.

9.

Taxable amount. Subtract line 8 from line 1. Enter the result, but not less than zero. Also, enter this amount on Form 1040, line 16b. If your Form 1099-R shows a larger amount, use the amount on this line instead of the amount from Form 1099-R. If you are a retired public safety officer, see Insurance Premiums for Retired Public Safety Officers before entering an amount on line 16b . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Was your annuity starting date before 1987?

Yes. STOP Leave line 10 blank.

No. Add lines 6 and 8. This is the amount you have recovered tax free through 2011. You will need this number when you fill out this worksheet next year . . . . . . . . . . . . . . . . 10.

Table 1 for Line 3 Above

AND your annuity starting date was— IF the age at annuity starting date was . . .

before November 19, 1996, enter on line 3 . . .

after November 18, 1996, enter on line 3 . . .

55 or under 300 360 56–60 260 310 61–65 240 260 66–70 170 210 71 or older 120 160

Table 2 for Line 3 Above IF the combined ages at annuity starting date were . . . THEN enter on line 3 . . .

110 or under 410 111–120 360 121–130 310 131–140 260 141 or older 210

2011 Form 1040—Lines 16a and 16b

the provider of the accident or health plan that would otherwise be included in your • A section 403(a) plan, or long-term care insurance contract. You income. • A section 403(b) plan, or can exclude from income the smaller of the • A section 457(b) plan.An eligible retirement plan is a govern-amount of the premiums or $3,000. You

mental plan that is:can only make this election for amounts If you make this election, reduce the • A qualified trust, otherwise taxable amount of your pension

Need more information or forms? Visit IRS.gov. - 24 -

2011 Form 1040—Lines 16a Through 20b

or annuity by the amount excluded. The Roth account died in 2011. See Pub. 575 toCost amount shown in box 2a of Form 1099-R figure the amount to include on line 16b.Your cost is generally your net investment does not reflect the exclusion. Report your • You received a distribution from thein the plan as of the annuity starting date. It total distributions on line 16a and the tax- designated Roth account in 2011. Usedoes not include pre-tax contributions. able amount on line 16b. Enter “PSO” next Form 8606 to figure the amount to includeYour net investment should be shown in to line 16b. on line 16b.box 9b of Form 1099-R for the first year

you received payments from the plan.If you are retired on disability and re- Lump-Sum Distributions porting your disability pension on line 7, Rollovers

If you received a lump-sum distributioninclude only the taxable amount on that line Generally, a qualified rollover is a tax-free from a profit-sharing or retirement plan,and enter “PSO” and the amount excluded distribution of cash or other assets from one your Form 1099-R should have the ‘‘Totalon the dotted line next to line 7. retirement plan that is contributed to an- distribution’’ box in box 2b checked. You

Simplified Method other plan within 60 days of receiving the may owe an additional tax if you received distribution. However, a qualified rollover an early distribution from a qualified retire-You must use the Simplified Method if ei- to a Roth IRA or a designated Roth account ment plan and the total amount was notther of the following applies. is generally not a tax-free distribution. Use rolled over in a qualified rollover. For de-

1. Your annuity starting date was after lines 16a and 16b to report a qualified rollo- tails, see the instructions for line 58. July 1, 1986, and you used this method last ver, including a direct rollover, from one year to figure the taxable part. Enter the total distribution on line 16aqualified employer’s plan to another or to

and the taxable part on line 16b. For details,an IRA or SEP.2. Your annuity starting date was after see Pub. 575.November 18, 1996, and both of the fol- Enter on line 16a the distribution from

lowing apply. Form 1099-R, box 1. From this amount, You may be able to pay less taxsubtract any contributions (usually showna. The payments are from a qualified on the distribution if you werein box 5) that were taxable to you whenemployee plan, a qualified employee annu- born before January 2, 1936, ormade. From that result, subtract the amountity, or a tax-sheltered annuity.

TIP you are the beneficiary of a de-of the qualified rollover. Enter the remain-b. On your annuity starting date, either ceased employee who was born before Jan-ing amount on line 16b. If the remainingyou were under age 75 or the number of uary 2, 1936. For details, see Form 4972.amount is zero and you have no other distri-years of guaranteed payments was fewer

bution to report on line 16b, enter zero onthan five. See Pub. 575 for the definition of line 16b. Also, enter ‘‘Rollover’’ next toguaranteed payments. line 16b. Line 19

See Pub. 575 for more details on rollo-If you must use the Simplified Method, Unemploymentvers, including special rules that apply tocomplete the Simplified Method Work- Compensationrollovers from designated Roth accounts,sheet in these instructions to figure the tax- partial rollovers of property, and distribu-able part of your pension or annuity. For You should receive a Form 1099-G show- tions under qualified domestic relations or-more details on the Simplified Method, see ing in box 1 the total unemployment com- ders.Pub. 575 or Pub. 721 for U.S. Civil Service pensation paid to you in 2011. Report this

retirement benefits. amount on line 19. However, if you made2010 Roth IRA rollovers. If you rolled contributions to a governmental unemploy-over part or all of a qualified retirementIf you received U.S. Civil Serv- ment compensation program and you areplan (other than a designated Roth account)ice retirement benefits and you not itemizing deductions, reduce theto a Roth IRA in 2010 and did not elect tochose the alternative annuity amount you report on line 19 by those con-report the taxable amount on your 2010CAUTION

! option, see Pub. 721 to figure tributions.return, include on line 16b the amount fromthe taxable part of your annuity. Do not use

your 2010 Form 8606, line 25a. However, If you received an overpayment of un-the Simplified Method Worksheet in these you may have to include a different amount employment compensation in 2011 andinstructions. on line 16b (or include an amount on line you repaid any of it in 2011, subtract the 15b instead of line 16b) if either of theAnnuity Starting Date amount you repaid from the total amount following applies. you received. Enter the result on line 19.Your annuity starting date is the later of the • You received a distribution from a Also, enter “Repaid” and the amount youfirst day of the first period for which you Roth IRA in 2010 or the owner of the Roth repaid on the dotted line next to line 19. If,received a payment or the date the plan’s IRA died in 2011. See Pub. 575 to figure in 2011, you repaid unemployment com-obligations became fixed. the amount to include on line 16b. pensation that you included in gross in-

Age (or Combined Ages) at come in an earlier year, you can deduct the• You received a distribution from a Annuity Starting Date amount repaid on Schedule A, line 23. ButRoth IRA in 2011. Use Form 8606 to figure

if you repaid more than $3,000, see Repay-the amount to include on line 15b.If you are the retiree, use your age on the ments in Pub. 525 for details on how toannuity starting date. If you are the survivor 2010 in-plan Roth rollovers. If you rolled report the repayment.of a retiree, use the retiree’s age on his or over part or all of a qualified retirement

her annuity starting date. But if your annu- plan to a designated Roth account in 2010 ity starting date was after 1997 and the and did not elect to report the taxable payments are for your life and that of your amount on your 2010 return, include on Lines 20a and 20b beneficiary, use your combined ages on the line 16b the amount from your 2010 Form annuity starting date. Social Security Benefits8606, line 25a. However, you may have to

include a different amount on line 16b ifIf you are the beneficiary of an em- You should receive a Form SSA-1099 either of the following applies.ployee who died, see Pub. 575. If there is showing in box 3 the total social security

more than one beneficiary, see Pub. 575 or • You received a distribution from your benefits paid to you. Box 4 will show the Pub. 721 to figure each beneficiary’s tax- designated Roth account in 2010 after Sep- amount of any benefits you repaid in 2011. able amount. tember 27, or the owner of the designated If you received railroad retirement benefits

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Social Security Benefits Worksheet—Lines 20a and 20b Keep for Your Records

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2011 Form 1040—Lines 20a and 20b

��������� � ��� � � Complete Form 1040, lines 21 and 23 through 32, if they apply to you. � Figure any write-in adjustments to be entered on the dotted line next to line 36 (see the

instructions for line 36). � If you are married filing separately and you lived apart from your spouse for all of 2011,

enter “D” to the right of the word “benefits” on line 20a. If you do not, you may get a math error notice from the IRS.

� Be sure you have read the Exception in the line 20a and 20b instructions to see if you can use this worksheet instead of a publication to find out if any of your benefits are taxable.

1. Enter the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099. Also, enter this amount on Form 1040, line 20a . . . . . . 1.

2. Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Combine the amounts from Form 1040, lines 7, 8a, 9a, 10 through 14, 15b, 16b, 17 through 19,

and 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter the amount, if any, from Form 1040, line 8b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Combine lines 2, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Enter the total of the amounts from Form 1040, lines 23 through 32, plus any write-in

adjustments you entered on the dotted line next to line 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Is the amount on line 6 less than the amount on line 5?

No. None of your social security benefits are taxable. Enter -0- on Form 1040, lineSTOP 20b.

Yes. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 8. If you are:

• Married filing jointly, enter $32,000 • Single, head of household, qualifying widow(er), or married filing

separately and you lived apart from your spouse for all of 2011, enter $25,000 } . . . . . . . . . . . . . . 8.• Married filing separately and you lived with your spouse at any timein 2011, skip lines 8 through 15; multiply line 7 by 85% (.85) and enter the result on line 16. Then go to line 17

9. Is the amount on line 8 less than the amount on line 7? No. None of your social security benefits are taxable. Enter -0- on Form 1040, lineSTOP

20b. If you are married filing separately and you lived apart from your spouse for all of 2011, be sure you entered “D” to the right of the word “benefits” on line 20a.

Yes. Subtract line 8 from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 10. Enter: $12,000 if married filing jointly; $9,000 if single, head of household, qualifying

widow(er), or married filing separately and you lived apart from your spouse for all of 2011 . . 10. 11. Subtract line 10 from line 9. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. 12. Enter the smaller of line 9 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Enter one-half of line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Enter the smaller of line 2 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 15. Multiply line 11 by 85% (.85). If line 11 is zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 17. Multiply line 1 by 85% (.85) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 18. Taxable social security benefits. Enter the smaller of line 16 or line 17. Also enter this amount

on Form 1040, line 20b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

If any of your benefits are taxable for 2011 and they include a lump-sum benefit payment that was for an earlier year, you may be able to reduce the taxable amount. See Pub. 915 for details.

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2011 Form 1040—Lines 20b and 21

treated as social security, you should re- tions from these accounts may be taxable if • Dividends on insurance policies if ceive a Form RRB-1099. (a) they are more than the qualified higher they exceed the total of all net premiums

education expenses of the designated bene- you paid for the contract. Use the Social Security Benefits Work- ficiary in 2011, and (b) they were not in- • Recapture of a charitable contributionsheet in these instructions to see if any of cluded in a qualified rollover. See Pub. 970. deduction relating to the contribution of ayour benefits are taxable. Nontaxable distributions from these ac- fractional interest in tangible personal

counts, including rollovers, do not have to property. See Fractional Interest in Tangi-Exception. Do not use the Social Security be reported on Form 1040. ble Personal Property in Pub. 526. InterestBenefits Worksheet in these instructions if and an additional 10% tax apply to theany of the following applies. You may have to pay an addi- amount of the recapture. See the instruc-• You made contributions to a tradi- tional tax if you received a tax- tions for line 60.tional IRA for 2011 and you or your spouse able distribution from aCAUTION

! were covered by a retirement plan at work • Recapture of a charitable contributionCoverdell ESA or a QTP. See or through self-employment. Instead, use deduction if the charitable organization dis-the Instructions for Form 5329. the worksheets in Pub. 590 to see if any of poses of the donated property within 3 your social security benefits are taxable and years of the contribution. See Recapture if• Taxable distributions from a health to figure your IRA deduction. savings account (HSA) or an Archer MSA. no exempt use in Pub. 526.

• You repaid any benefits in 2011 and Distributions from these accounts may be • Canceled debts. These amounts mayyour total repayments (box 4) were more taxable if (a) they are more than the un- be shown in box 2 of Form 1099-C. How-than your total benefits for 2011 (box 3). reimbursed qualified medical expenses of ever, part or all of your income from theNone of your benefits are taxable for 2011. the account beneficiary or account holder cancellation of debt may be nontaxable.Also, you may be able to take an itemized in 2011, and (b) they were not included in a See Pub. 4681 or go to IRS.gov and enterdeduction or a credit for part of the excess qualified rollover. See Pub. 969. “canceled debt” or “foreclosure” in therepayments if they were for benefits you included in gross income in an earlier year. search box.

You may have to pay an addi-For more details, see Pub. 915. • Taxable part of disaster relief pay-tional tax if you received a tax-• You file Form 2555, 2555-EZ, 4563, ments. See Pub. 525 to figure the taxableable distribution from an HSA or 8815, or you exclude employer-provided CAUTION

! part, if any. If any of your disaster reliefor an Archer MSA. See the In-

adoption benefits or income from sources payment is taxable, attach a statementstructions for Form 8889 for HSAs or the within Puerto Rico. Instead, use the work- showing the total payment received andInstructions for Form 8853 for Archersheet in Pub. 915. how you figured the taxable part.MSAs.

• Amounts deemed to be income from an HSA because you did not remain an Nontaxable income. Do not report any eligible individual during the testing pe-Line 21 nontaxable income on line 21. Examples of riod. See Form 8889, Part III. nontaxable income include the following.Other Income • Gambling winnings, including lotter- • Child support.Do not report on this line any ies, raffles, a lump-sum payment from the

• Payments you received to help youincome from self-employment sale of a right to receive future lottery pay- pay your mortgage loan under the HFAor fees received as a notary ments, etc. For details on gambling losses,CAUTION

! Hardest Hit Fund or the Emergency Home-public. Instead, you must use see the instructions for Schedule A, line 28.

Schedule C, C-EZ, or F, even if you do not owners’ Loan Program or similar state pro- have any business expenses. Also, do not gram.Attach Form(s) W-2G to report on line 21 any nonemployee com- Form 1040 if any federal in- • Any Pay-for-Performance Success pensation shown on Form 1099-MISC (un- come tax was withheld. Payments that reduce the principal balanceless it is not self-employment income, such

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of your home mortgage under the Homeas income from a hobby or a sporadic activ- • Alternative trade adjustment assis- Affordable Modification Program.ity). Instead, see the instructions on Form tance (ATAA) or reemployment trade ad- • Life insurance proceeds received be-1099-MISC to find out where to report that justment assistance (RTAA) payments.income. cause of someone’s death (other than from These payments should be shown in box 5 certain employer-owned life insurance con- of Form 1099-G.Taxable income. Use line 21 to report any tracts).• Reimbursements or other amounts re-taxable income not reported elsewhere on • Gifts and bequests. However, if youceived for items deducted in an earlier year,your return or other schedules. List the type received a gift or bequest from a foreignsuch as medical expenses, real estate taxes,and amount of income. If necessary, in- person of more than $14,375, you maygeneral sales taxes, or home mortgage in-clude a statement showing the required in-

have to report information about it on Formterest. See Recoveries in Pub. 525 for de-formation. For more details, see 3520, Part IV. See the Instructions fortails on how to figure the amount to report.Miscellaneous Income in Pub. 525. Form 3520.• Income from the rental of personal

Examples of income to report on line 21 property if you engaged in the rental for include the following. profit but were not in the business of rent- Net operating loss (NOL) deduction. In-

• Prizes and awards. ing such property. Also, see the instructions clude on line 21 any NOL deduction from for line 36.• Jury duty pay. Also, see the instruc- an earlier year. Subtract it from any income

tions for line 36. on line 21 and enter the result. If the result• Income from an activity not engaged in for profit. See Pub. 535. is less than zero, enter it in parentheses. On• Alaska Permanent Fund dividends.

the dotted line next to line 21, enter “NOL”• Loss on certain corrective distribu-• Taxable distributions from a Cover- and show the amount of the deduction intions of excess deferrals. See Retirementdell education savings account (ESA) or a

Plan Contributions in Pub. 525. parentheses. See Pub. 536 for details.qualified tuition program (QTP). Distribu-

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2011 Form 1040—Lines 23 Through 29

• Business expenses of fee-basis state • You were self-employed and had a net or local government officials. profit for the year.Adjusted Gross

• You were a partner with net earningsFor more details, see Form 2106 or from self-employment.2106-EZ.Income

• You used one of the optional methods to figure your net earnings from self-em- ployment on Schedule SE.Line 23 Line 25 • You received wages in 2011 from an S corporation in which you were aEducator Expenses Health Savings Account more-than-2% shareholder. Health insur-

If you were an eligible educator in 2011, (HSA) Deduction ance premiums paid or reimbursed by the S you can deduct on line 23 up to $250 of corporation are shown as wages on FormYou may be able to take this deduction ifqualified expenses you paid in 2011. If you W-2.contributions (other than employer contri-and your spouse are filing jointly and both butions, rollovers, and qualified HSA fund- The insurance plan must be establishedof you were eligible educators, the maxi- ing distributions from an IRA) were made under your business. Your personal serv-mum deduction is $500. However, neither to your HSA for 2011. See Form 8889. ices must have been a material income-pro-spouse can deduct more than $250 of his or ducing factor in the business. If you areher qualified expenses on line 23. You may filing Schedule C, C-EZ, or F, the policybe able to deduct expenses that are more can be either in your name or in the name of than the $250 (or $500) limit on Schedule Line 26 the business. A, line 21. An eligible educator is a kinder- Moving Expenses If you are a partner, the policy can begarten through grade 12 teacher, instructor,

either in your name or in the name of thecounselor, principal, or aide who worked in If you moved in connection with your job partnership. You can either pay the premi-a school for at least 900 hours during a or business or started a new job, you may ums yourself or your partnership can payschool year. be able to take this deduction. But your new them and report them as guaranteed pay-workplace must be at least 50 miles farther ments. If the policy is in your name and youQualified expenses include ordinary and from your old home than your old home pay the premiums yourself, the partnershipnecessary expenses paid in connection with was from your old workplace. If you had no must reimburse you and report the premi-books, supplies, equipment (including former workplace, your new workplace ums as guaranteed payments.computer equipment, software, and serv- must be at least 50 miles from your old ices), and other materials used in the class- home. Use TeleTax topic 455 or see Form If you are a more-than-2% shareholder room. An ordinary expense is one that is 3903. in an S corporation, the policy can be either common and accepted in your educational in your name or in the name of the S corpo- field. A necessary expense is one that is ration. You can either pay the premiums helpful and appropriate for your profession yourself or the S corporation can pay themLine 27 and report them as wages. If the policy is inas an educator. An expense does not have

your name and you pay the premiums your-to be required to be considered necessary. Deductible Part of self, the S corporation must reimburse you. Qualified expenses do not include ex- Self-Employment Tax You can deduct the premiums only if the S

penses for home schooling or for corporation reports the premiums paid orIf you were self-employed and owenonathletic supplies for courses in health or reimbursed as wages in box 1 of your Formself-employment tax, fill in Schedule SE tophysical education. W-2 in 2011 and you also report the pre-figure the amount of your deduction. If you mium payments or reimbursements ascompleted Section A of Schedule SE, theYou must reduce your qualified ex- wages on Form 1040, line 7.deductible part of your self-employmentpenses by the following amounts. tax is on line 6. If you completed Section B But if you were also eligible to partici-• Excludable U.S. series EE and I sav- of Schedule SE, it is on line 13. pate in any subsidized health plan main-ings bond interest from Form 8815. tained by your or your spouse’s employer• Nontaxable qualified tuition program for any month or part of a month in 2011,

earnings or distributions. amounts paid for health insurance coverageLine 28 for that month cannot be used to figure the• Any nontaxable distribution of Cover- deduction. Also, if you were eligible fordell education savings account earnings. Self-Employed SEP, SIMPLE, any month or part of a month to participate• Any reimbursements you received for and Qualified Plans in any subsidized health plan maintained by

these expenses that were not reported to the employer of either your dependent orIf you were self-employed or a partner, youyou in box 1 of your Form W-2. your child who was under age 27 at the endmay be able to take this deduction. See of 2011, do not use amounts paid for cover-For more details, use TeleTax topic 458 Pub. 560 or, if you were a minister, Pub. age for that month to figure the deduction.or see Pub. 529. 517. Example. If you were eligible to par-

ticipate in a subsidized health plan main- tained by your spouse’s employer from

Line 24 Line 29 September 30 through December 31, you cannot use amounts paid for health insur-

Certain Business Expenses Self-Employed Health ance coverage for September through De- cember to figure your deduction.of Reservists, Performing Insurance Deduction

Artists, and Fee-Basis Medicare premiums you voluntarily payYou may be able to deduct the amount you to obtain insurance that is similar to quali-paid for health insurance for yourself, yourGovernment Officials fying private health insurance can be usedspouse, and your dependents. The insur-Include the following deductions on to figure the deduction. Amounts paid forance can also cover your child who wasline 24. health insurance coverage from retirementunder age 27 at the end of 2011, even if the• Certain business expenses of National plan distributions that were nontaxable be-child was not your dependent. A child in-

Guard and reserve members who traveled cause you are a retired public safety officercludes your son, daughter, stepchild, more than 100 miles from home to perform cannot be used to figure the deduction.adopted child, or foster child (defined in the services as a National Guard or reserve line 6c instructions). For more details, see Pub. 535.member.

One of the following statements must be• Performing-arts-related expenses as a If you qualify to take the deduction, use true.qualified performing artist. the Self-Employed Health Insurance De-

Need more information or forms? Visit IRS.gov. - 28 -

Self-Employed Health Insurance Deduction Worksheet—Line 29 Keep for Your Records

2011 Form 1040—Lines 29 Through 32

��������� � ��� � � If, during 2011, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation pension recipient, see the instructions for Form 8885 to figure the amount to enter on line 1 of this worksheet.

� Be sure you have read the Exception in the instructions for this line to see if you can use this worksheet instead of Pub. 535 to figure your deduction.

1. Enter the total amount paid in 2011 for health insurance coverage established under your business (or the S corporation in which you were a more-than-2% shareholder) for 2011 for you, your spouse, and your dependents. Your insurance can also cover your child who was under age 27 at the end of 2011, even if the child was not your dependent. But do not include amounts for any month you were eligible to participate in an employer-sponsored health plan or amounts paid from retirement plan distributions that were nontaxable because you are a retired public safety officer . . 1.

2. Enter your net profit* and any other earned income** from the business under which the insurance plan is established, minus any deductions on Form 1040, lines 27 and 28. Do not include Conservation Reserve Program payments exempt from self-employment tax . . . . . . . . . . . . . . . . . . 2.

3. Self-employed health insurance deduction. Enter the smaller of line 1 or line 2 here and on Form 1040, line 29. Do not include this amount in figuring any medical expense deduction on Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

*If you used either optional method to figure your net earnings from self-employment, do not enter your net profit. Instead, enter the amount from Schedule SE, Section B, line 4b.

**Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. However, it does not include capital gain income. If you were a more-than-2% shareholder in the S corporation under which the insurance plan is established, earned income is your Medicare wages (box 5 of Form W-2) from that corporation.

duction Worksheet to figure the amount (saver’s credit). See the instructions for lineLine 32you can deduct. 50. IRA Deduction

Exception. Use Pub. 535 instead of the If you are filing a joint returnIf you made any nondeductibleSelf-Employed Health Insurance Deduc- and you or your spouse madecontributions to a traditional in-tion Worksheet in these instructions to fig- contributions to both a tradi-dividual retirement arrange- CAUTION !

ure your deduction if any of the following tional IRA and a Roth IRA for TIP

ment (IRA) for 2011, you mustapplies. 2011, do not use the IRA Deduction Work-report them on Form 8606. sheet in these instructions. Instead, see Pub.• You had more than one source of in- 590 to figure the amount, if any, of yourIf you made contributions to a tradi-come subject to self-employment tax. IRA deduction.tional IRA for 2011, you may be able to• You file Form 2555 or 2555-EZ.

take an IRA deduction. But you, or your• You are using amounts paid for quali- spouse if filing a joint return, must have 3. You cannot deduct elective deferralsfied long-term care insurance to figure the had earned income to do so. For IRA pur- to a 401(k) plan, 403(b) plan, section 457deduction. poses, earned income includes alimony and plan, SIMPLE plan, or the federal Thriftseparate maintenance payments reported Savings Plan. These amounts are not in-on line 11. If you were a member of the cluded as income in box 1 of your FormU.S. Armed Forces, earned income in- W-2. But you may be able to take the retire-Line 30 cludes any nontaxable combat pay you re- ment savings contributions credit. See theceived. If you were self-employed, earned instructions for line 50.Penalty on Early Withdrawal income is generally your net earnings from 4. If you made contributions to yourself-employment if your personal servicesof Savings

IRA in 2011 that you deducted for 2010, dowere a material income-producing factor. not include them in the worksheet.For more details, see Pub. 590. A statementThe Form 1099-INT or Form 1099-OID

should be sent to you by May 31, 2012, that 5. If you received income from a non-you received will show the amount of any shows all contributions to your traditional qualified deferred compensation plan orpenalty you were charged. IRA for 2011. nongovernmental section 457 plan that is

included in box 1 of your Form W-2, or in Use the IRA Deduction Worksheet to box 7 of Form 1099-MISC, do not include

figure the amount, if any, of your IRA de- that income on line 8 of the worksheet. TheLines 31a and 31b duction. But read the following 10-item list income should be shown in (a) box 11 of before you fill in the worksheet. your Form W-2, (b) box 12 of your FormAlimony Paid

W-2 with code Z, or (c) box 15b of Form1. If you were age 701⁄2 or older at the If you made payments to or for your spouse 1099-MISC. If it is not, contact your em-end of 2011, you cannot deduct any contri-

ployer or the payer for the amount of theor former spouse under a divorce or separa- butions made to your traditional IRA for income.2011 or treat them as nondeductible contri-tion instrument, you may be able to take

butions. 6. You must file a joint return to deductthis deduction. Use TeleTax topic 452 or contributions to your spouse’s IRA. Enter2. You cannot deduct contributions to asee Pub. 504. the total IRA deduction for you and yourRoth IRA. But you may be able to take the spouse on line 32.retirement savings contributions credit

- 29 - Need more information or forms? Visit IRS.gov.

IRA Deduction Worksheet—Line 32 Keep for Your Records

2011 Form 1040—Line 32

7. Do not include qualified rollover con- 9. Do not include any repayments of contributions for 2011, see Pub. 590 for tributions in figuring your deduction. In- qualified reservist distributions. You can- special rules. stead, see the instructions for lines 15a and not deduct them. For information on how to 15b. report these repayments, see Qualified re- By April 1 of the year after the

servist repayments in Pub. 590.8. Do not include trustees’ fees that year in which you turn age 701⁄2, were billed separately and paid by you for 10. If the total of your IRA deduction on you must start taking minimum

TIP your IRA. These fees can be deducted only line 32 plus any nondeductible contribution required distributions from as an itemized deduction on Schedule A. to your traditional IRAs shown on Form your traditional IRA. If you do not, you

8606 is less than your total traditional IRA may have to pay a 50% additional tax on

If you were age 701⁄2 or older at the end of 2011, you cannot deduct any contributions made to your traditional IRA or treat them as nondeductible contributions. Do not complete this worksheet for anyone age 701⁄2 or older at the end of 2011. If you are married filing jointly and only one spouse was under age 701⁄2 at the end of 2011, complete this worksheet only for that spouse.CAUTION

! ��������� � ��� � � Be sure you have read the 10-item list in the instructions for this line. You may not be able to use this worksheet.

� Figure any write-in adjustments to be entered on the dotted line next to line 36 (see the instructions for line 36). � If you are married filing separately and you lived apart from your spouse for all of 2011, enter “D” on the dotted

line next to Form 1040, line 32. If you do not, you may get a math error notice from the IRS.

Your IRA Spouse’s IRA

1a. Were you covered by a retirement plan (see Were You Covered by a Retirement 1a. Yes No Plan?)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b. If married filing jointly, was your spouse covered by a retirement plan? . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b. Yes No Next. If you checked “No” on line 1a (and “No” on line 1b if married filing jointly), skip lines 2 through 6, enter the applicable amount below on line 7a (and line 7b if applicable), and go to line 8.

• $5,000, if under age 50 at the end of 2011. • $6,000, if age 50 or older but under age 701⁄2 at the end of 2011.

Otherwise, go to line 2.

2. Enter the amount shown below that applies to you. • Single, head of household, or married filing separately and you lived apart

from your spouse for all of 2011, enter $66,000 • Qualifying widow(er), enter $110,000 } 2a. 2b.• Married filing jointly, enter $110,000 in both columns. But if you checked“No” on either line 1a or 1b, enter $179,000 for the person who was not covered by a plan • Married filing separately and you lived with your spouse at any time in 2011,

enter $10,000

3. Enter the amount from Form 1040, line 22 . . . . . . . . . . . 3.

4. Enter the total of the amounts from Form 1040, lines 23 through 31a, plus any write-in adjustments you entered on the dotted line next to line 36 . . . . . . . . . . . . . . . . . . . . 4.

5. Subtract line 4 from line 3. If married filing jointly, enter the result in both columns 5a. 5b.

6. Is the amount on line 5 less than the amount on line 2? None of your IRA contributions are deductible. For details on No. nondeductible IRA contributions, see Form 8606.

STOP

Subtract line 5 from line 2 in each column. Follow the instruction below Yes. that applies to you.

• If single, head of household, or married filing separately, and the result is $10,000 or more, enter the applicable amount below on line 7 for that column and go to line 8.

i. $5,000, if under age 50 at the end of 2011. ii. $6,000, if age 50 or older but under age 701⁄2 at the end

of 2011. If the result is less than $10,000, go to line 7. } 6a. 6b.• If married filing jointly or qualifying widow(er), and the result is $20,000 or more ($10,000 or more in the column for the IRA ofa person who was not covered by a retirement plan), enter theapplicable amount below on line 7 for that column and go toline 8.

i. $5,000, if under age 50 at the end of 2011. ii. $6,000 if age 50 or older but under age 701⁄2 at the end

of 2011. Otherwise, go to line 7.

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IRA Deduction Worksheet—�� �� ��

2011 Form 1040—Line 32

Your IRA Spouse’s IRA 7. Multiply lines 6a and 6b by the percentage below that applies to you. If the

result is not a multiple of $10, increase it to the next multiple of $10 (for example, increase $490.30 to $500). If the result is $200 or more, enter the result. But if it is less than $200, enter $200.

• Single, head of household, or married filing separately, multiply by 50% (.50) (or by 60% (.60) in the column for the IRA of a person who is age }50 or older at the end of 2011) 7a. 7b.• Married filing jointly or qualifying widow(er), multiply by 25% (.25) (or by 30% (.30) in the column for the IRA of a person who is age 50 or older at the end of 2011). But if you checked “No” on either line 1a or 1b, then in the column for the IRA of the person who was not covered by a retirement plan, multiply by 50% (.50) (or by 60% (.60) if age 50 or older at the end of 2011)

8. Enter the total of your (and your spouse’s if filing jointly):

• Wages, salaries, tips, etc. Generally, this is the amount reported in box 1 of Form W-2. Exceptions are explained earlier in these instructions for line 32 } 8.• Alimony and separate maintenance payments reportedon Form 1040, line 11• Nontaxable combat pay. This amount should be reported in box 12 of Form W-2 with code Q

9. Enter the earned income you (and your spouse if filing jointly) received as a self-employed individual or a partner. Generally, this is your (and your spouse’s if filing jointly) net earnings from self-employment if your personal services were a material income-producing factor, minus any deductions on Form 1040, lines 27 and 28. If zero or less, enter -0-. For more details, see Pub. 590 . . . . . . . . . . . . . . . . . 9.

10. Add lines 8 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

If married filing jointly and line 10 is less than $10,000 ($11,000 if one spouse is age 50 or older at the end of 2011; $12,000 if both spouses are age 50 or older at the end of 2011), stop here and seeCAUTION

! Pub. 590 to figure your IRA deduction.

11. Enter traditional IRA contributions made, or that will be made by April 17, 2012, for 2011 to your IRA on line 11a and to your spouse’s IRA on line 11b . . . . . . . 11a. 11b.

12. On line 12a, enter the smallest of line 7a, 10, or 11a. On line 12b, enter the smallest of line 7b, 10, or 11b. This is the most you can deduct. Add the amounts on lines 12a and 12b and enter the total on Form 1040, line 32. Or, if you want, you can deduct a smaller amount and treat the rest as a nondeductible contribution (see Form 8606) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12a. 12b.

the amount that should have been distrib- In any case, the income earned on your IRA tion benefits, see Pub. 590 to figure the uted. For details, including how to figure contributions is not taxed until it is paid to amount, if any, of your IRA deduction. the minimum required distribution, see you. Pub. 590. Married persons filing separately. If youThe “Retirement plan” box in box 13 of

were not covered by a retirement plan butWere You Covered by a your Form W-2 should be checked if you your spouse was, you are considered cov-were covered by a plan at work even if youRetirement Plan? ered by a plan unless you lived apart fromwere not vested in the plan. You are alsoIf you were covered by a retirement plan your spouse for all of 2011.covered by a plan if you were self-em-(qualified pension, profit-sharing (includ- ployed and had a SEP, SIMPLE, or quali-ing 401(k)), annuity, SEP, SIMPLE, etc.) at fied retirement plan. You may be able to take thework or through self-employment, your

retirement savings contribu-IRA deduction may be reduced or elimi- If you were covered by a retirement plan tions credit. See the line 50 in-nated. But you can still make contributions and you file Form 2555, 2555-EZ, or 8815,

TIP structions.to an IRA even if you cannot deduct them. or you exclude employer-provided adop-

- 31 - Need more information or forms? Visit IRS.gov.

Student Loan Interest Deduction Worksheet—Line 33 Keep for Your Records

2011 Form 1040—Line 33

1. Yourself or your spouse. most colleges, universities, and certain vo- cational schools. You must reduce the ex-Line 33 2. Any person who was your dependent penses by the following benefits.when the loan was taken out.Student Loan Interest • Employer-provided educational assis-3. Any person you could have claimedDeduction tance benefits that are not included in box 1as a dependent for the year the loan was

taken out except that: of Form(s) W-2.You can take this deduction only if all of the following apply. • Excludable U.S. series EE and I sav-a. The person filed a joint return,

ings bond interest from Form 8815.• You paid interest in 2011 on a quali- b. The person had gross income that was fied student loan (see below). • Any nontaxable distribution of quali-equal to or more than the exemption

• Your filing status is any status except fied tuition program earnings.amount for that year ($3,700 for 2011), or married filing separately. • Any nontaxable distribution of Cover-c. You, or your spouse if filing jointly,

• Your modified adjusted gross income dell education savings account earnings.could be claimed as a dependent on some- (AGI) is less than: $75,000 if single, head one else’s return. • Any scholarship, educational assis- of household, or qualifying widow(er); tance allowance, or other payment (but not $150,000 if married filing jointly. Use lines gifts, inheritances, etc.) excluded from in-The person for whom the expenses were2 through 4 of the worksheet below to fig- come.paid must have been an eligible studenture your modified AGI. (defined later). However, a loan is not a• You, or your spouse if filing jointly, For more details on these expenses, seequalified student loan if (a) any of the pro- are not claimed as a dependent on someone Pub. 970.ceeds were used for other purposes, or (b) else’s (such as your parent’s) 2011 tax re- the loan was from either a related person or turn. Eligible student. An eligible student is aa person who borrowed the proceeds under

person who:a qualified employer plan or a contract pur-Use the worksheet below to figure your chased under such a plan. To find out whostudent loan interest deduction. • Was enrolled in a degree, certificate, is a related person, see Pub. 970. or other program (including a program ofException. Use Pub. 970 instead of the

study abroad that was approved for creditworksheet below to figure your student Qualified higher education expenses. by the institution at which the student wasloan interest deduction if you file Form Qualified higher education expenses gener- enrolled) leading to a recognized educa-2555, 2555-EZ, or 4563, or you exclude ally include tuition, fees, room and board, tional credential at an eligible educationalincome from sources within Puerto Rico. and related expenses such as books and institution, andsupplies. The expenses must be for educa-Qualified student loan. A qualified student

• Carried at least half the normaltion in a degree, certificate, or similar pro-loan is any loan you took out to pay the full-time workload for the course of studygram at an eligible educational institution.qualified higher education expenses for any he or she was pursuing.An eligible educational institution includesof the following individuals.

��������� � ��� � � Figure any write-in adjustments to be entered on the dotted line next to line 36 (see the instructions for line 36).

� Be sure you have read the Exception above to see if you can use this worksheet instead of Pub. 970 to figure your deduction.

1. Enter the total interest you paid in 2011 on qualified student loans (see above). Do not enter more than $2,500 1. 2. Enter the amount from Form 1040, line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2. 3. Enter the total of the amounts from Form 1040, lines 23 through 32, plus any write-in

adjustments you entered on the dotted line next to line 36 . . . . . . . . . . . . . . . . . . . . . . . . .3. 4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Enter the amount shown below for your filing status.

• Single, head of household, or qualifying widow(er)—$60,000 } . . . . . . . . . . .5.• Married filing jointly—$120,000 6. Is the amount on line 4 more than the amount on line 5?

Skip lines 6 and 7, enter -0- on line 8, and go to line 9. No. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6. Yes.

7. Divide line 6 by $15,000 ($30,000 if married filing jointly). Enter the result as a decimal (rounded to at least three places). If the result is 1.000 or more, enter 1.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. .

8. Multiply line 1 by line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 9. Student loan interest deduction. Subtract line 8 from line 1. Enter the result here and on

Form 1040, line 33. Do not include this amount in figuring any other deduction on your return (such as on Schedule A, C, E, etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

Need more information or forms? Visit IRS.gov. - 32 -

2011 Form 1040—Lines 34 Through 40

tified by your eye doctor (ophthalmologistor publication indicated. On the dotted line or optometrist) that:next to line 36, enter the amount of yourLine 34

deduction and identify it as indicated. • You cannot see better than 20/200 in Tuition and Fees your better eye with glasses or contact• Archer MSA deduction (see Form lenses, orIf you paid qualified tuition and fees for 8853). Identify as “MSA.” • Your field of vision is 20 degrees oryourse l f , your spouse , or your • Jury duty pay if you gave the pay to less.dependent(s), you may be able to take this your employer because your employer paid deduction. See Form 8917. If your eye condition is not likely toyour salary while you served on the jury.

improve beyond the conditions listedIdentify as “Jury Pay.”You may be able to take a credit above, you can get a statement certified by• Deductible expenses related to in-for your educational expenses your eye doctor (ophthalmologist or op- come reported on line 21 from the rental ofinstead of a deduction. See the tometrist) to this effect instead.

TIP personal property engaged in for profit.instructions for line 49 for de-

You must keep the statement for yourIdentify as “PPR.”tails. records.• Reforestation amortization and ex-

penses (see Pub. 535). Identify as “RFST.” • Repayment of supplemental unem-Line 35 Line 39bployment benefits under the Trade Act of

1974 (see Pub. 525). Identify as “Sub-PayDomestic Production If your filing status is married filing sepa- TRA.” rately (box 3 is checked), and your spouseActivities Deduction

itemizes deductions on his or her return,• C o n t r i b u t i o n s t o s e c t i o nYou may be able to deduct up to 9% of check the box on line 39b. Also check that501(c)(18)(D) pension plans (see Pub.your qualified production activities income box if you were a dual-status alien. But if525). Identify as “501(c)(18)(D).”from the following activities. you were a dual-status alien and you file a• Contributions by certain chaplains to joint return with your spouse who was a1. Construction of real property per- section 403(b) plans (see Pub. 517). Iden- U.S. citizen or resident alien at the end offormed in the United States. tify as “403(b).” 2011 and you and your spouse agree to be 2. Engineering or architectural services taxed on your combined worldwide in-• Attorney fees and court costs for ac-

performed in the United States for con- come, do not check the box.tions involving certain unlawful discrimi- struction of real property in the United nation claims, but only to the extent of States. gross income from such actions (see Pub.

3. Any lease, rental, license, sale, ex- 525). Identify as “UDC.” Line 40 change, or other disposition of: • Attorney fees and court costs you paid

Itemized Deductions orin connection with an award from the IRSa. Tangible personal property, computer Standard Deductionfor information you provided that helpedsoftware, and sound recordings that you

the IRS detect tax law violations, up to themanufactured, produced, grew, or ex- In most cases, your federal income tax will amount of the award includible in your be less if you take the larger of your item-tracted in whole or in significant part in the

ized deductions or standard deduction.gross income. Identify as “WBF.”United States, b. Any qualified film you produced, or Itemized Deductions c. Electricity, natural gas, or potable To figure your itemized deductions, fill in

water you produced in the United States. Line 37 Schedule A. If line 37 is less than zero, you may have a Standard DeductionIn certain cases, the references above to net operating loss that you can carry to Most people can find their standard deduc-the United States include Puerto Rico. another tax year. See the Instructions for tion by looking at the amounts listed under

Your deduction may be reduced if you Form 1045 for details. “All others” to the left of line 40. had oil-related qualified production activi-

Exception 1 – dependent. If you, or yourties income. spouse if filing jointly, can be claimed as a

The deduction does not apply to income dependent on someone else’s 2011 return,Tax and Creditsderived from: use the Standard Deduction Worksheet for Dependents to figure your standard deduc-• The sale of food and beverages you tion.prepared at a retail establishment; Line 39a Exception 2 – box on line 39a checked. If• Property you leased, licensed, or you checked any box on line 39a, use theIf you were born before January 2, 1947, orrented for use by any related person; chart below the Standard Deduction Work-were blind at the end of 2011, check the• The transmission or distribution of sheet for Dependents to figure your stan-appropriate box(es) on line 39a. If you wereelectricity, natural gas, or potable water; or dard deduction.married and checked the box on Form• The lease, rental, license, sale, ex- 1040, line 6b, and your spouse was born Exception 3 – box on line 39b checked. Ifchange, or other disposition of land. before January 2, 1947, or was blind at the you checked the box on line 39b, your stan-end of 2011, also check the appropriate dard deduction is zero, even if you wereFor details, see Form 8903 and its in- box(es) for your spouse. Be sure to enter born before January 2, 1947, or were blind.structions. the total number of boxes checked. Do not

check any box(es) for your spouse if your If you received a refund in 2011 filing status is head of household. of an amount (such as real es-

tate taxes) that increased yourLine 36 CAUTION! standard deduction in an earlierBlindnessInclude in the total on line 36 any of the year, you generally have to include the re-

following write-in adjustments. To find out If you were not totally blind as of Decem- fund in your income. See Recoveries in ber 31, 2011, you must get a statement cer-if you can take the deduction, see the form Pub. 525.

- 33 - Need more information or forms? Visit IRS.gov.

Standard Deduction Worksheet for Dependents—Line 40 Keep for Your Records

2011 Form 1040—Line 40

Use this worksheet only if someone can claim you, or your spouse if filing jointly, as a dependent.

1. Is your earned income* more than $650? Yes. Add $300 to your earned income. Enter the total

} . . . . . . . . . . . . . . . . . . . . . . . . 1.No. Enter $950 2. Enter the amount shown below for your filing status.

• Single or married filing separately—$5,800 • Married filing jointly or qualifying widow(er)—$11,600 . . . . . . . . . . . . . . . . . . . . . . . 2. • Head of household—$8,500 }

3. Standard deduction. a. Enter the smaller of line 1 or line 2. If born after January 1, 1947, and not blind, stop here and

enter this amount on Form 1040, line 40. Otherwise, go to line 3b . . . . . . . . . . . . . . . . . . . . . . . 3a. b. If born before January 2, 1947, or blind, multiply the number on Form 1040, line 39a, by $1,150

($1,450 if single or head of household) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b. c. Add lines 3a and 3b. Enter the total here and on Form 1040, line 40 . . . . . . . . . . . . . . . . . . . . . . 3c.

* Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27.

Standard Deduction Chart for People Who Were Born Before January 2, 1947, or Were Blind Do not use this chart if someone can claim you, or your spouse if filing jointly, as a dependent. Instead, use the worksheet above.

Enter the number from the box on Do not use the number of exemptions �Form 1040, line 39a . . . . . . . . . . . . . . . from line 6d.CAUTION

!

IF your filing AND the number in THEN your standard status is . . . the box above is . . . deduction is . . .

1 $7,250Single 2 8,700

1 $12,750Married filing jointly 2 13,900 or 3 15,050Qualifying widow(er) 4 16,200

1 $6,950 2 8,100Married filing separately 3 9,250 4 10,400

1 $9,950Head of household 2 11,400

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2011 Form 1040—Line 44

Tax Table or Tax Computation Work- ule D is more than zero, use the Schedule D sheet. If your taxable income is less than Tax Worksheet in the Instructions for $100,000, you must use the Tax Table, later Schedule D to figure the amount to enter on in these instructions, to figure your tax. Be Form 1040, line 44. But if you are filingLine 44 sure you use the correct column. If your Form 2555 or 2555-EZ, you must use the

Tax taxable income is $100,000 or more, use Foreign Earned Income Tax Worksheet in- stead.the Tax Computation Worksheet right afterInclude in the total on line 44 all of the

the Tax Table.following taxes that apply. • Tax on your taxable income. Figure Qualified Dividends and Capital Gain TaxHowever, do not use the Tax Table orthe tax using one of the methods described Worksheet. Use the Qualified DividendsTax Computation Worksheet to figure yourhere. and Capital Gain Tax Worksheet, later, totax if any of the following applies. figure your tax if you do not have to use the• Tax from Form 8814 (relating to the

Schedule D Tax Worksheet and if any ofelection to report child’s interest or divi- Form 8615. Form 8615 generally must be the following applies.dends). Check the appropriate box. used to figure the tax for any child who had • Tax from Form 4972 (relating to • You reported qualified dividends onmore than $1,900 of investment income,

lump-sum distributions). Check the appro- Form 1040, line 9b.such as taxable interest, ordinary divi- priate box. dends, or capital gains (including capital • You do not have to file Schedule D

gain distributions), and who either:• Tax due to making a section 962 elec- and you reported capital gain distributions tion (the election made by a domestic on Form 1040, line 13.1. Was under age 18 at the end of 2011, shareholder of a controlled foreign corpo- • You are filing Schedule D and Sched-2. Was age 18 at the end of 2011 and didration to be taxed at corporate rates). See ule D, lines 15 and 16, are both more thannot have earned income that was more thansection 962 for details. Check the appropri- zero.half of the child’s support, orate box and attach a statement showing

3. Was a full-time student over age 18how you figured the tax. But if you are filing Form 2555 orand under age 24 at the end of 2011 and did• Recapture of an education credit. You 2555-EZ, you must use the Foreign Earnednot have earned income that was more thanmay owe this tax if you claimed an educa- Income Tax Worksheet instead.half of the child’s support.tion credit in an earlier year, and either

tax-free educational assistance or a refund of qualified expenses was received in 2011 Schedule J. If you had income from farm-But if the child files a joint return for for the student. See Form 8863 for more ing or fishing (including certain amounts2011 or if neither of the child’s parents was details. Enter the amount and “ECR” in the received in connection with the Exxonalive at the end of 2011, do not use Form space next to line 44. Valdez litigation), your tax may be less if8615 to figure the child’s tax.

you choose to figure it using income aver-Do you want the IRS to figure the tax aging on Schedule J.A child born on January 1, 1994, is con-on your taxable income for you?

sidered to be age 18 at the end of 2011; a � Yes. See chapter 29 of Pub. 17 for child born on January 1, 1993, is consid- Foreign Earned Income Tax Worksheet.details, including who is eligible and what ered to be age 19 at the end of 2011; a child If you claimed the foreign earned incometo do. If you have paid too much, we will born on January 1, 1988, is considered to be exclusion, housing exclusion, or housingsend you a refund. If you did not pay age 24 at the end of 2011. deduction on Form 2555 or 2555-EZ, youenough, we will send you a bill.

must figure your tax using the Foreign Schedule D Tax Worksheet. If you have to� No. Use one of the following methods Earned Income Tax Worksheet. file Schedule D, and line 18 or 19 of Sched-to figure your tax.

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Foreign Earned Income Tax Worksheet—Line 44 Keep for Your Records

CAUTION !

2011 Form 1040—Line 44

CAUTION !

If Form 1040, line 43, is zero, do not complete this worksheet.

1. Enter the amount from Form 1040, line 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the amount from your (and your spouse’s, if filing jointly) Form 2555, lines 45 and 50, or

Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Tax on the amount on line 3. Use the Tax Table, Tax Computation Worksheet, Qualified

Dividends and Capital Gain Tax Worksheet*, Schedule D Tax Worksheet*, or Form 8615, whichever applies. See the instructions for line 44 to see which tax computation method applies. (Do not use a second Foreign Earned Income Tax Worksheet to figure the tax on this line) . . . . . 4.

5. Tax on the amount on line 2. If the amount on line 2 is less than $100,000, use the Tax Table to figure this tax. If the amount on line 2 is $100,000 or more, use the Tax Computation Worksheet 5.

6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on Form 1040, line 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

*Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet or Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you have a capital gain excess. To find out if you have a capital gain excess, subtract Form 1040, line 43, from line 6 of your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.

If you do not have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions. Then complete lines 5 and 6 above.

If you have a capital gain excess, complete a second Qualified Dividends and Capital Gain Tax Worksheet or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the Foreign Earned Income Tax Worksheet above.

1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your Schedule D Tax Worksheet by your capital gain excess.

2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your Qualified Dividends and Capital Gain Tax Worksheet or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.

3. Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess.

4. Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the Instructions for Schedule D (Form 1040).

Need more information or forms? Visit IRS.gov. - 36 -

Qualified Dividends and Capital Gain Tax Worksheet—Line 44 Keep for Your Records

2011 Form 1040—Line 44

��������� � ��� � � See the earlier instructions for line 44 to see if you can use this worksheet to figure your tax.

� If you do not have to file Schedule D and you received capital gain distributions, be sure you checked the box on line 13 of Form 1040.

1. Enter the amount from Form 1040, line 43. However, if you are filing Form 2555 or 2555-EZ (relating to foreign earned income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . 1.

2. Enter the amount from Form 1040, line 9b* . . . . . . . . . 2. 3. Are you filing Schedule D?*

Yes. Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is blank or a loss, enter -0- } 3.

No. Enter the amount from Form 1040, line 13 4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. If filing Form 4952 (used to figure investment interest

expense deduction), enter any amount from line 4g of that form. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . 5.

6. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . 6. 7. Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . 7. 8. Enter:

$34,500 if single or married filing separately, $69,000 if married filing jointly or qualifying widow(er), . . . . . . . . . . . 8.}$46,250 if head of household.

9. Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 10. Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . 11. 12. Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 15. Multiply line 14 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 16. Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax

Table to figure this tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.

17. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 18. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax

Table to figure this tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Tax on all taxable income. Enter the smaller of line 17 or line 18. Also include this amount on Form 1040, line 44. If you are filing Form 2555 or 2555-EZ, do not enter this amount on Form 1040, line 44. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet . . . . . . . . . 19.

*If you are filing Form 2555 or 2555-EZ, see the footnote in the Foreign Earned Income Tax Worksheet before completing this line.

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2011 Form 1040—Lines 45 Through 50

Do you meet all five requirements • You are taking a deduction for tuition above? and fees on Form 1040, line 34, for theLine 45

same student. � Yes. Enter on line 47 the smaller ofAlternative Minimum Tax • You, or your spouse, were a nonresi-(a) your total foreign taxes, or (b) the

dent alien for any part of 2011 unless yourUse Form 6251 to figure the amount, if any, amount on Form 1040, line 44. filing status is married filing jointly.of your alternative minimum tax (AMT).

� No. See Form 1116 to find out if youAlso see the Instructions for Form 6251 to can take the credit and, if you can, if yousee if you must file the form. have to file Form 1116.

An electronic “AMT Assistant” Line 50 is available on IRS.gov to help

Retirement Savingsyou see if you should fill out TIP

Line 48Form 6251. Enter “AMT Assis- Contributions Credit tant” in the search box. (Saver’s Credit)Credit for Child and

You may be able to take this credit if you,Dependent Care Expenses or your spouse if filing jointly, made (a)You may be able to take this credit if youLine 47 contributions, other than rollover contribu-paid someone to care for: tions, to a traditional or Roth IRA; (b) elec-Foreign Tax Credit • Your qualifying child under age 13 tive deferrals to a 401(k) or 403(b) plan

whom you claim as your dependent, (including designated Roth contributions)If you paid income tax to a foreign country, • Your disabled spouse or any other dis- or to a governmental 457, SEP, or SIMPLEyou may be able to take this credit. Gener-

abled person who could not care for him- plan; (c) voluntary employee contributionsally, you must complete and attach Form self or herself, or to a qualified retirement plan (including the1116 to do so.

federal Thrift Savings Plan); or (d) contri-• Your child whom you could not claimException. You do not have to complete butions to a 501(c)(18)(D) plan.as a dependent because of the rules forForm 1116 to take this credit if all of the Children of divorced or separated parents However, you cannot take the credit iffollowing apply. in the instructions for line 6c. either of the following applies.

1. All of your foreign source gross in- For details, use TeleTax topic 602 or see 1. The amount on Form 1040, line 38, iscome was from interest and dividends and Form 2441. more than $28,250 ($42,375 if head ofall of that income and the foreign tax paid household; $56,500 if married filingon it were reported to you on Form jointly).1099-INT, Form 1099-DIV, or Schedule

K-1 (or substitute statement). 2. The person(s) who made the qualifiedLine 49 contribution or elective deferral (a) was2. The total of your foreign taxes was Education Credits born after January 1, 1994, (b) is claimed asnot more than $300 (not more than $600 if a dependent on someone else’s 2011 taxmarried filing jointly). If you (or your dependent) paid qualified return, or (c) was a student (defined next).expenses in 2011 for yourself, your spouse,3. You held the stock or bonds on which

or your dependent to enroll in or attend anthe dividends or interest were paid for at You were a student if during any part ofeligible educational institution, you may beleast 16 days and were not obligated to pay 5 calendar months of 2011 you:able to take an education credit. See Formthese amounts to someone else. • Were enrolled as a full-time student at8863 for details. However, you cannot take4. You are not filing Form 4563 or ex- a school, oran education credit if any of the followingcluding income from sources within Puerto applies. • Took a full-time, on-farm trainingRico.

course given by a school or a state, county,• You, or your spouse if filing jointly,5. All of your foreign taxes were: or local government agency.are claimed as a dependent on someone a. Legally owed and not eligible for a else’s (such as your parent’s) 2011 tax re- A school includes a technical, trade, or

refund or reduced tax rate under a tax turn. mechanical school. It does not include an treaty, and on-the-job training course, correspondence• Your filing status is married filing

b. Paid to countries that are recognized school, or school offering courses onlyseparately. by the United States and do not support through the Internet.• The amount on Form 1040, line 38, is terrorism. $90,000 or more ($180,000 or more if mar- For more details, use TeleTax topic 610

ried filing jointly). or see Form 8880.For more details on these requirements, see the Instructions for Form 1116.

Need more information or forms? Visit IRS.gov. - 38 -

2011 Form 1040—Line 51

Line 51—Child Tax Credit

Three Steps To Take the Child Tax Credit!

Step 1. Make sure you have a qualifying child for the child tax credit. Follow Steps 1 through 3 in the instructions for line 6c. If you do not have a qualifying child, you cannot claim the child tax credit.

Step 2. Make sure you checked the box on Form 1040, line 6c, column (4), for each qualifying child.

Step 3. Answer the questions below to see if you can use the Child Tax Credit Worksheet to figure your credit or if you must use Pub. 972.

Who Must UseQuestion Pub. 972

Pub. 972

1. Are you claiming any of the following credits? • Mortgage interest credit, Form 8396. • District of Columbia first-time homebuyer credit, Form

8859. • Residential energy efficient property credit, Form 5695,

Part II.

Yes. No. ContinueSTOP �You must use Pub.

972 to figure your child tax credit. You will also need the form(s) listed above for any credit(s) you are claiming.

2. Are you excluding income from Puerto Rico or are you filing any of the following forms? • Form 2555 or 2555-EZ (relating to foreign earned

income). • Form 4563 (exclusion of income for residents of

American Samoa).

Yes. No. Use the Child TaxSTOP Credit Worksheet to figureYou must use Pub. your credit.972 to figure your

credit.

- 39 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Line 51

2011 Child Tax Credit Worksheet—Line 51

Yes. Subtract line 3 from line 2.

● To be a qualifying child for the child tax credit, the child must be your dependent, under age 17 at the end of 2011, and meet all the conditions in Steps 1 through 3 in the instructions for line 6c.

● Do not use this worksheet if you answered “Yes” to question 1 or 2 of Who Must Use Pub. 972, earlier. Instead, use Pub. 972.

1.

4.

5.

1Number of qualifying children: $1,000. Enter the result.

Is the amount on line 2 more than the amount on line 3?

If the result is not a multiple of $1,000, increase it to the next multiple of $1,000. For example, increase $425 to $1,000, increase $1,025 to $2,000, etc.

No. Leave line 4 blank. Enter -0- on line 5, and go to line 6.

Multiply the amount on line 4 by 5% (.05). Enter the result.

4

2. 2Enter the amount from Form 1040, line 38.

3. Enter the amount shown below for your filing status.

3

Keep for Your Records

CAUTION

● Married filing jointly — $110,000

● Single, head of household, or qualifying widow(er) — $75,000

● Married filing separately — $55,000

No. STOP

6. Is the amount on line 1 more than the amount on line 5?

You cannot take the child tax credit on Form 1040, line 51. You also cannot take the additional child tax credit on Form 1040, line 65. Complete the rest of your Form 1040.

Yes. Subtract line 5 from line 1. Enter the result. Go to Part 2.

5

Part 1

6

● If you do not have a qualifying child, you cannot claim the child tax credit.

Need more information or forms? Visit IRS.gov. - 40 -

2011 Form 1040—Line 51

2011 Child Tax Credit Worksheet—Continued

1040

Yes. STOP

9.

10.

Are the amounts on lines 7 and 8 the same?

You cannot take this credit because there is no tax to reduce. However, you may be able to take the additional child tax credit. See the TIP below.

No. Subtract line 8 from line 7.

Is the amount on line 6 more than the amount on line 9?

Yes. Enter the amount from line 9. Also, you may be able to take the additional child tax credit. See the TIP below.

No. Enter the amount from line 6.

This is your child tax credit.

Enter this amount on Form 1040, line 51.

You may be able to take the additional child tax credit on Form 1040, line 65, if you answered “Yes” on line 9 or line 10 above.

● First, complete your Form 1040 through lines 64a and 64b.

● Then, use Form 8812 to figure any additional child tax credit.

9

10

7. 7Enter the amount from Form 1040, line 46.

8. Add any amounts from:

8

Keep for Your Records

TIP

Form 1040, line 47

+Form 1040, line 48

Enter the total.

Part 2

+Form 5695, line 14

+Schedule R, line 22

Before you begin Part 2: Figure the amount of any credits you are claiming on Form 5695, Part I; Form 8834, Part I; Form 8910; Form 8936; or Schedule R.

+Form 1040, line 50

+Form 1040, line 49

+Form 8834, line 23

+Form 8910, line 22

+Form 8936, line 15

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2011 Form 1040—Lines 52 Through 58

More details. For details, see Form 5695. railroad retirement (RRTA) tax on the un-Line 52 reported tips. Do not include the value of any noncashResidential Energy Credits

tips, such as tickets or passes. You do notLine 53Nonbusiness energy property credit. You pay social security and Medicare taxes ormay be able to take this credit by complet- Other Credits RRTA tax on these noncash tips.ing and attaching Form 5695 for any of the

Enter the total of the following credits onfollowing improvements to your main To figure the social security and Medi- line 53 and check the appropriate box(es).home located in the United States in 2011 if care tax, use Form 4137. If you owe RRTA Check all boxes that apply. If box c isthey are new and meet certain requirements tax, contact your employer. Your employer checked, also enter the applicable formfor energy efficiency. will figure and collect the RRTA tax.number. To find out if you can take the

• Any insulation material or system pri- credit, see the form or publication indi- You may be charged a penalty marily designed to reduce heat gain or loss cated. equal to 50% of the social se- in your home. curity and Medicare or RRTA• General business credit. This credit CAUTION!• Exterior windows (including sky- tax due on tips you received butconsists of a number of credits that usually lights). apply only to individuals who are partners, did not report to your employer.

• Exterior doors. shareholders in an S corporation, self-em- Form 8919. If you are an employee whoployed, or who have rental property. See• A metal roof or asphalt roof with pig- received wages from an employer who didForm 3800 or Pub. 334.mented coatings or cooling granules prima- not withhold social security and Medicarerily designed to reduce the heat gain in your • Credit for prior year minimum tax. If tax from your wages, use Form 8919 tohome. you paid alternative minimum tax in a prior figure your share of the unreported tax. In-year, see Form 8801. clude on line 57 the amount from line 13 of• Mortgage interest credit. If a state orYou may also be able to take this credit Form 8919. Include the amount from line 6local government gave you a mortgagefor the cost of the following items if the of Form 8919 on Form 1040, line 7.credit certificate, see Form 8396.items meet certain performance and quality

standards. • Credit for the elderly or the disabled. See Schedule R.• Certain electric heat pump water heat- Line 58• District of Columbia first-timeers, electric heat pumps, central air condi- homebuyer credit. See Form 8859.tioners, and natural gas, propane, or oil Additional Tax on IRAs,• Qualified plug-in electric drive motorwater heaters. Other Qualified Retirementvehicle credit. See Form 8936.• A qualified furnace or hot water boiler

Plans, etc.• Qualified plug-in electric vehiclethat uses natural gas, propane, or oil. credit. See Form 8834, Part I. If any of the following apply, see Form• A stove that burns biomass fuel to

• Qualified electric vehicle credit. Youheat your home or to heat water for use in 5329 and its instructions to find out if you cannot claim this credit for a vehicle placedyour home. owe this tax and if you must file Form in service after 2006. You can claim this 5329.• An advanced main air circulating fan credit only if you have an electric vehicleused in a natural gas, propane, or oil fur- 1. You received an early distributionpassive activity credit carried forward fromnace. from (a) an IRA or other qualified retire-a prior year. See Form 8834, Part II.

ment plan, (b) an annuity, or (c) a modified• Alternative motor vehicle credit. See Residential energy efficient property endowment contract entered into after JuneForm 8910 if you placed a new fuel cell credit. You may be able to take this credit 20, 1988, and the total distribution was notmotor vehicle in service during 2011 or by completing and attaching Form 5695 if rolled over in a qualified rollover contribu-converted a motor vehicle to a qualified you paid for any of the following during tion.plug-in electric drive motor vehicle in 2011. 2011. 2. Excess contributions were made to

• Alternative fuel vehicle refueling your IRAs, Coverdell education savings ac-• Qualified solar electric property for property credit. See Form 8911.use in your home located in the United counts (ESAs), Archer MSAs, or health

States. savings accounts (HSAs).• Credit to holders of tax credit bonds. See Form 8912.• Qualified solar water heating property 3. You received taxable distributions

for use in your home located in the United from Coverdell ESAs or qualified tuition States. programs.

• Qualified fuel cell property installed 4. You were born before July 1, 1940, on or in connection with your main home Other Taxes and did not take the minimum required dis- located in the United States. tribution from your IRA or other qualified

• Qualified small wind energy property retirement plan. for use in connection with your home lo- Line 57 cated in the United States. Exception. If only item (1) applies and dis-

Unreported Social Security• Qualified geothermal heat pump prop- tribution code 1 is correctly shown in box 7 erty installed on or in connection with your of Form 1099-R, you do not have to fileand Medicare Tax from home located in the United States. Form 5329. Instead, multiply the taxableForms 4137 and 8919

amount of the distribution by 10% (.10) and Enter the total of any taxes from Form 4137 enter the result on line 58. The taxableCondos and co-ops. If you are a member of and Form 8919. Check the appropriate amount of the distribution is the part of thea condominium management association box(es). distribution you reported on Form 1040,for a condominium you own or a

line 15b or line 16b, or on Form 4972.tenant-stockholder in a cooperative hous- Form 4137. If you received tips of $20 or Also, enter “No” under the heading Othering corporation, you are treated as having more in any month and you did not report Taxes to the left of line 58 to indicate thatpaid your proportionate share of any costs the full amount to your employer, you must you do not have to file Form 5329. But youof such association or corporation for pur-

poses of these credits. pay the social security and Medicare or must file Form 5329 if distribution code 1

Need more information or forms? Visit IRS.gov. - 42 -

2011 Form 1040—Lines 58 Through 60

is incorrectly shown in box 7 of Form 8. Section 72(m)(5) excess benefits taxLine 60 (see Pub. 560). Identify as “Sec. 72(m)(5).”1099-R or you qualify for an exception, such as the exceptions for qualified medical 9. Uncollected social security andOther Taxes expenses, qualified higher education ex- Medicare or RRTA tax on tips or

Use line 60 to report any taxes not reportedpenses, qualified first-time homebuyer dis- group-term life insurance. This tax should elsewhere on your return or other sched-tributions, or a qualified reservist be shown in box 12 of Form W-2 with ules. To find out if you owe the tax, see the codes A and B or M and N. Identify asdistribution. form or publication indicated. In the space “UT.” next to line 60, enter the amount of the tax 10. Golden parachute payments. If you and the code that identifies it. If you need received an excess parachute paymentLine 59a more room, attach a statement listing the (EPP), you must pay a 20% tax on it. This amount of each tax and the code. Enter onHousehold Employment tax should be shown in box 12 of Form line 60 the total of all of the following taxes W-2 with code K. If you received a FormTaxes you owe. 1099-MISC, the tax is 20% of the EPP

Enter the household employment taxes you shown in box 13. Identify as “EPP.”1. Additional tax on health savings ac-owe for having a household employee. If 11. Tax on accumulation distribution ofcount (HSA) distributions (see Form 8889, any of the following apply, see Schedule H trusts (see Form 4970). Identify as “ADT.”Part II). Identify as “HSA.” and its instructions to find out if you owe 12. Excise tax on insider stock compen-2. Additional tax on an HSA becausethese taxes. sation from an expatriated corporation.you did not remain an eligible individual

1. You paid any one household em- You may owe a 15% excise tax on theduring the testing period (see Form 8889, value of nonstatutory stock options and cer-ployee (defined below) cash wages of Part III). Identify as “HDHP.” tain other stock-based compensation held$1,700 or more in 2011. Cash wages in- 3. Additional tax on Archer MSA distri- by you or a member of your family from anclude wages paid by check, money order, butions (see Form 8853). Identify as expatriated corporation or its expanded af-etc. But do not count amounts paid to an “MSA.” filiated group in which you were an officer,employee who was under age 18 at any

4. Additional tax on Medicare Advan- director, or more-than-10% owner. Seetime in 2011 and was a student. tage MSA distributions (see Form 8853). section 4985. Identify as “ISC.”2. You withheld federal income tax dur- Identify as “Med MSA.” 13. Interest on the tax due on installmenting 2011 at the request of any household

5. Recapture of the following credits. income from the sale of certain residentialemployee. lots and timeshares. Identify as “453(l)(3).”a. Investment credit (see Form 4255).3. You paid total cash wages of $1,000 14. Interest on the deferred tax on gainIdentify as “ICR.”or more in any calendar quarter of 2010 or

from certain installment sales with a salesb. Low-income housing credit (see2011 to household employees. price over $150,000. Identify as “453A(c).”Form 8611). Identify as “LIHCR.”Any person who does household work is a 15. Additional tax on recapture of a char-c. Qualified plug-in electric vehiclehousehold employee if you can control itable contribution deduction relating to acredit (see Form 8834, Part I). Identify aswhat will be done and how it will be done. fractional interest in tangible personal“8834.”Household work includes work done in or property. See Pub. 526. Identify as

d. Indian employment credit (see Formaround your home by babysitters, nannies, “FITPP.” 8845). Identify as “IECR.”health aides, maids, yard workers, and sim- 16. Look-back interest under sectionilar domestic workers. e. New markets credit (see Form 8874). 167(g) or 460(b). See Form 8697 or 8866. Identify as “NMCR.” Identify as “From Form 8697” or “From

f. Credit for employer-provided child Form 8866.” care facilities (see Form 8882). Identify asLine 59b 17. Any negative amount on Form 8885, “ECCFR.” line 7, because of advance payments of theFirst-time Homebuyer Credit g. Alternative motor vehicle credit (see health coverage tax credit you received for

Repayment months you were not eligible. Enter thisForm 8910). Identify as “AMVCR.” additional tax as a positive amount. Iden-h. Alternative fuel vehicle refuelingEnter the first-time homebuyer credit you tify as “HCTC.”property credit (see Form 8911). Identify ashave to repay if you: 18. Additional tax on income you re-“ARPCR.”• Disposed of the home within 36 ceived from a nonqualified deferred com-i. Qualified plug-in electric drive motormonths after buying it, pensation plan that fails to meet thevehicle credit (see Form 8936). Identify as• Stopped using the home as your main requirements of section 409A. This income“8936.”home within 36 months after buying it, or should be shown in box 12 of Form W-2

6. Recapture of federal mortgage sub- with code Z, or in box 15b of Form• Bought the home in 2008. sidy. If you sold your home in 2011 and it 1099-MISC. The tax is 20% of the amount was financed (in whole or in part) from theIf you bought the home in 2008 and required to be included in income plus an proceeds of any tax-exempt qualified mort-owned and used it as your main home for interest amount determined under section gage bond or you claimed the mortgage 4 0 9 A ( a ) ( 1 ) ( B ) ( i i ) . S e e s e c t i o nall of 2011, you can enter your 2011 repay- interest credit, see Form 8828. Identify as 409A(a)(1)(B) for details. Identify asment on this line without attaching Form “FMSR.” “NQDC.”5405.

7. Recapture of COBRA premium assis- 19. Additional tax on compensation you See the Form 5405 instructions for de- tance. If you received premium assistance received from a nonqualified deferred com-

tails and for exceptions to the repayment under COBRA continuation coverage that pensation plan described in section 457A if rule. Also see the Form 5405 instructions if covered you, your spouse, or any of your the compensation would have been includi- the home you bought was destroyed, con- dependents, and your modified adjusted ble in your income in an earlier year except demned, or disposed of under threat of con- gross income is more than $125,000 that the amount was not determinable until demnation and you did not buy a new home ($250,000 if married filing jointly), see 2011. The tax is 20% of the amount re- within 2 years. Pub. 502. Identify as “COBRA.” quired to be included in income plus an

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Page 44 of 100 of Instructions 1040 13:56 - 28-NOV-2011

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2011 Form 1040—Lines 60 Through 63

If you received a 2011 Form 1099interest amount determined under section you and your spouse divided the payments. showing federal income tax withheld on457A(c)(2). See section 457A for details. Be sure to show both social security num- dividends, taxable or tax-exempt interestIdentify as “457A.” bers (SSNs) in the space provided on the income, unemployment compensation, so- separate returns. If you or your spouse paid cial security benefits, or other income you separate estimated tax but you are now fil-received, include the amount withheld in ing a joint return, add the amounts you eachthe total on line 62. This should be shownLine 61 paid. Follow these instructions even if yourin box 4 of Form 1099 or box 6 of Form

spouse died in 2011 or in 2012 before filingSSA-1099.Total Tax a 2011 return.

Add lines 55 through 60 to get your total tax. Divorced Taxpayers

Line 63If you are reading “Total Tax” because If you got divorced in 2011 and you made of what you read in the 2011 Form W-2 joint estimated tax payments with your for-2011 Estimated TaxInstructions for Employee, see the line 60 mer spouse, enter your former spouse’sinstructions instead. Payments SSN in the space provided on the front of

Form 1040. If you were divorced and re-Enter any estimated federal income tax married in 2011, enter your presentpayments you made for 2011. Include any spouse’s SSN in the space provided on theoverpayment that you applied to your 2011Payments front of Form 1040. Also, under the head-estimated tax from: ing Payments to the left of line 63, enter• Your 2010 return, or your former spouse’s SSN, followed by• An amended return (Form 1040X).Line 62 “DIV.”

If you and your spouse paid joint esti-Federal Income Tax Name Changemated tax but are now filing separate in-Withheld come tax returns, you can divide the If you changed your name because of mar-

Add the amounts shown as federal income amount paid in any way you choose as long riage, divorce, etc., and you made esti-tax withheld on your Forms W-2, W-2G, as you both agree. If you cannot agree, you mated tax payments using your formerand 1099-R. Enter the total on line 62. The must divide the payments in proportion to name, attach a statement to the front ofamount withheld should be shown in box 2 each spouse’s individual tax as shown on Form 1040. On the statement, explain allof Form W-2 or W-2G, and in box 4 of your separate returns for 2011. For an ex- the payments you and your spouse made inForm 1099-R. Attach Forms W-2G and ample of how to do this, see Pub. 505. You 2011 and the name(s) and SSN(s) under1099-R to the front of your return if federal

income tax was withheld. may want to attach an explanation of how which you made them.

Need more information or forms? Visit IRS.gov. - 44 -

2011 Form 1040—Lines 64a and 64b

Yes. No. ContinueSTOP �

Lines 64a and 64b— You cannot take theEarned Income Credit (EIC) credit.

What Is the EIC? 5. Were you or your spouse a nonresident alien for any part of 2011?The EIC is a credit for certain people who work. The credit may

give you a refund even if you do not owe any tax. Yes. See Nonresident No. Go to Step 2. aliens, later, underTo Take the EIC: Definitions and

• Follow the steps below. Special Rules. • Complete the worksheet that applies to you or let the IRS

figure the credit for you. • If you have a qualifying child, complete and attach Schedule Investment IncomeStep 2

EIC. For help in determining if you are eligible for the EIC, go to 1. Add the amounts from www.irs.gov/eitc and click on “EITC Assistant.” This service is Form 1040: available in English and Spanish.

Line 8aIf you take the EIC even though you are not eligible and it is determined that your error is due to reckless or Line 8b + intentional disregard of the EIC rules, you will not be

Line 9a +CAUTION !

allowed to take the credit for 2 years even if you are otherwise eligible to do so. If you fraudulently take the EIC, you Line 13* + will not be allowed to take the credit for 10 years. See Form 8862, who must file, later. You may also have to pay penalties.

Investment Income = All FilersStep 1

*If line 13 is a loss, enter -0-. 1. If, in 2011:

2. Is your investment income more than $3,150?• 3 or more children lived with you, is the amount on Form Yes. Continue No. Skip question 3; go to

� 1040, line 38, less than $43,998 ($49,078 if married filing

question 4.jointly)? • 2 children lived with you, is the amount on Form 1040,

line 38, less than $40,964 ($46,044 if married filing 3. Are you filing Form 4797 (relating to sales of business jointly)? property)?

• 1 child lived with you, is the amount on Form 1040, line Yes. See Form 4797 No. STOP 38, less than $36,052 ($41,132 if married filing jointly)? filers, later, under You cannot take the credit.• No children lived with you, is the amount on Form 1040, Definitions and line 38, less than $13,660 ($18,740 if married filing Special Rules. jointly)?

4. Do any of the following apply for 2011?Yes. Continue No. �

STOP

• You are filing Schedule E.You cannot take the credit. • You are reporting income from the rental of personal

property not used in a trade or business.2. Do you, and your spouse if filing a joint return, have a • You are reporting income on Form 1040, line 21, fromsocial security number that allows you to work or is valid Form 8814 (relating to election to report child’s interestfor EIC purposes (explained later under Definitions and and dividends).Special Rules)?

Yes. You must use No. Go to Step 3.Yes. Continue No. �

STOP Worksheet 1 in Pub.

You cannot take the credit. 596 to see if you can Enter “No” on the dotted take the credit. line next to line 64a.

3. Is your filing status married filing separately?

Yes. No. ContinueSTOP �You cannot take the

credit.

4. Are you filing Form 2555 or 2555-EZ (relating to foreign earned income)?

- 45 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Lines 64a and 64b

2. Are you filing a joint return for 2011? Qualifying ChildStep 3 Yes. Skip question 3 No. Continue

�and Step 4; go to Step 5.

A qualifying child for the EIC is a child who is your... 3. Could you be a qualifying child of another person in 2011? (Check “No” if the other person is not required to file, and

Son, daughter, stepchild, foster child, brother, sister, is not filing, a 2011 tax return or is filing a 2011 return only as a claim for refund (defined in the instructions for linestepbrother, stepsister, half brother, half sister, or a 6c).)descendant of any of them (for example, your grandchild,

niece, or nephew) Yes. No. Skip Step 4; go toSTOP Step 5.You cannot take the

credit. Enter “No” on the dotted line next to

AND

line 64a. was ...

Under age 19 at the end of 2011 and younger than you Filers Without a Qualifying ChildStep 4(or your spouse, if filing jointly)

1. Is the amount on Form 1040, line 38, less than $13,660or ($18,740 if married filing jointly)?

Under age 24 at the end of 2011, a student (defined later), Yes. Continue No.

� STOPand younger than you (or your spouse, if filing jointly)

You cannot take the credit.or Any age and permanently and totally disabled (defined later)

2. Were you, or your spouse if filing a joint return, at least age 25 but under age 65 at the end of 2011? (Check “Yes” if you were born after December 31, 1946, and before January 2, 1987.) If your spouse died in 2011, see Pub. 596 before

AND

you answer.Who is not filing a joint return for 2011 Yes. Continue No.

� STOPor is filing a joint return for 2011 only as a claim for refund

(defined later) You cannot take the credit.

3. Was your main home, and your spouse’s if filing a joint return, in the United States for more than half of 2011?

AND

Members of the military stationed outside the United States, Who lived with you in the United States for more than half see Members of the military, later, before you answer.

of 2011. Yes. Continue No.

� STOPIf the child did not live with you for the required time, see

You cannot take the credit.Exception to time lived with you, later. Enter “No” on the dotted line next to line 64a.

4. Are you filing a joint return for 2011?CAUTION !

If the child meets the conditions to be a qualifying child of any other person (other than your spouse if filing a Yes. Skip questions 5 No. Continue

�joint return) for 2011, see Qualifying child of more than one and 6; go to Step 5. person, later. If the child was married, see Married child,

later. 5. Could you be a qualifying child of another person in 2011?

Yes. No. ContinueSTOP �1. Do you have at least one child who meets the conditions to You cannot take the

be your qualifying child? credit. Enter “No” on the dotted line next to line 64a.Yes. The child must No. Skip questions 2 and

have a valid social se- 3; go to Step 4. curity number (SSN) 6. Can you be claimed as a dependent on someone else’s 2011 as defined later, unless tax return? the child was born and

Yes. No. Go to Step 5.STOPdied in 2011. If at least one qualifying You cannot take the child has a valid SSN credit. (or was born or died in 2011), go to ques- tion 2. Otherwise, you cannot take the credit.

Need more information or forms? Visit IRS.gov. - 46 -

2011 Form 1040—Lines 64a and 64b

• No qualifying children, is your earned income less than $13,660 ($18,740 if married filing jointly)?Earned IncomeStep 5

Yes. Go to Step 6. No. STOP 1. Are you filing Schedule SE because you were a member of You cannot take the credit.

the clergy or you had church employee income of $108.28 or more?

Yes. See Clergy or No. Continue �

How To Figure the CreditStep 6 Church employees, whichever applies. 1. Do you want the IRS to figure the credit for you?

Yes. See Credit No. Go to Worksheet A. 2. Figure earned income: figured by the IRS,

later. Form 1040, line 7

Subtract, if included on line 7, any: Definitions and Special Rules • Taxable scholarship or fellowship grant Adopted child. An adopted child is always treated as your own

not reported on a Form W-2. child. An adopted child includes a child lawfully placed with you for legal adoption.• Amount received for work performed

while an inmate in a penal institution Church employees. Determine how much of the amount on Form (enter “PRI” and the amount subtracted 1040, line 7, was also reported on Schedule SE, Section B, line 5a.

Subtract that amount from the amount on Form 1040, line 7, andon the dotted line next to Form 1040, enter the result in the first space of Step 5, line 2. Be sure to answerline 7). “Yes” to question 3 in Step 5.

• Amount received as a pension or annuity Claim for refund. A claim for refund is a return filed only to get afrom a nonqualified deferred – refund of withheld income tax or estimated tax paid. A return is notcompensation plan or a nongovernmental a claim for refund if the EIC or any other similar refundable credit is

section 457 plan (enter “DFC” and the claimed on it. amount subtracted on the dotted line next Clergy. The following instructions apply to ministers, members of}to Form 1040, line 7). This amount may religious orders who have not taken a vow of poverty, and Christian be shown in box 11 of Form W-2. If you Science practitioners. If you are filing Schedule SE and the amount

on line 2 of that schedule includes an amount that was also reportedreceived such an amount but box 11 is on Form 1040, line 7:blank, contact your employer for the

1. Enter “Clergy” on the dotted line next to Form 1040, line 64a.amount received as a pension or annuity. 2. Determine how much of the amount on Form 1040, line 7,Add all of your nontaxable combat pay if was also reported on Schedule SE, Section A, line 2, or

you elect to include it in earned income. Section B, line 2. Also enter this amount on Form 1040, 3. Subtract that amount from the amount on Form 1040, line 64b. See Combat pay, nontaxable line 7. Enter the result in the first space of Step 5, line 2. later. + 4. Be sure to answer “Yes” to question 3 in Step 5.

Combat pay, nontaxable. If you were a member of the U.S. Armed Forces who served in a combat zone, certain pay is excluded from

CAUTION !

Electing to include nontaxable your income. See Combat Zone Exclusion in Pub. 3. You can elect to include this pay in your earned income when figuring the EIC.combat pay may increase or decrease The amount of your nontaxable combat pay should be shown in boxyour EIC. Figure the credit with and 12 of Form(s) W-2 with code Q. If you are filing a joint return andwithout your nontaxable combat pay both you and your spouse received nontaxable combat pay, you can

before making the election. each make your own election. Credit figured by the IRS. To have the IRS figure your EIC: Earned Income =

1. Enter “EIC” on the dotted line next to Form 1040, line 64a. 2. Be sure you enter the nontaxable combat pay you elect to3. Were you self-employed at any time in 2011, or are you

include in earned income on Form 1040, line 64b. See Com-filing Schedule SE because you were a member of the bat pay, nontaxable, above.clergy or you had church employee income, or are you filing

3. If you have a qualifying child, complete and attach ScheduleSchedule C or C-EZ as a statutory employee? EIC. If your EIC for a year after 1996 was reduced or disal-

Yes. Skip question 4 No. Continue �

lowed, see Form 8862, who must file, later. and Step 6; go to Worksheet B. Exception to time lived with you. Temporary absences by you or

the child for special circumstances, such as school, vacation, busi- ness, medical care, military service, or detention in a juvenile facil-4. If you have: ity, count as time the child lived with you. Also see Kidnapped child• 3 or more qualifying children, is your earned income less in the instructions for line 6c or Members of the military, later. A

than $43,998 ($49,078 if married filing jointly)? child is considered to have lived with you for all of 2011 if the child was born or died in 2011 and your home was this child’s home for• 2 qualifying children, is your earned income less than the entire time he or she was alive in 2011.$40,964 ($46,044 if married filing jointly)?

• 1 qualifying child, is your earned income less than Form 4797 filers. If the amount on Form 1040, line 13, includes an $36,052 ($41,132 if married filing jointly)? amount from Form 4797, you must use Worksheet 1 in Pub. 596 to

- 47 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Lines 64a and 64b

see if you can take the EIC. Otherwise, stop; you cannot take the • If only one of the persons is the child’s parent, the child is EIC. treated as the qualifying child of the parent. Form 8862, who must file. You must file Form 8862 if your EIC for • If the parents do not file a joint return together but both parents a year after 1996 was reduced or disallowed for any reason other claim the child as a qualifying child, the IRS will treat the than a math or clerical error. But do not file Form 8862 if either of child as the qualifying child of the parent with whom the child the following applies. lived for the longer period of time in 2011. If the child lived

with each parent for the same amount of time, the IRS will• You filed Form 8862 for another year, the EIC was allowed for treat the child as the qualifying child of the parent who had thethat year, and your EIC has not been reduced or disallowed higher adjusted gross income (AGI) for 2011.again for any reason other than a math or clerical error.

• If no parent can claim the child as a qualifying child, the child• You are taking the EIC without a qualifying child and the only is treated as the qualifying child of the person who had thereason your EIC was reduced or disallowed in the other year highest AGI for 2011.was because it was determined that a child listed on Schedule

EIC was not your qualifying child. • If a parent can claim the child as a qualifying child but no Also, do not file Form 8862 or take the credit for the: parent does so claim the child, the child is treated as the

qualifying child of the person who had the highest AGI for• 2 years after the most recent tax year for which there was a 2011, but only if that person’s AGI is higher than the highestfinal determination that your EIC claim was due to reckless or AGI of any parent of the child who can claim the child.intentional disregard of the EIC rules, or

Example. Your daughter meets the conditions to be a qualifying• 10 years after the most recent tax year for which there was a child for both you and your mother. Your daughter does not meetfinal determination that your EIC claim was due to fraud. the conditions to be a qualifying child of any other person, includ-

Foster child. A foster child is any child placed with you by an ing her other parent. Under the rules above, you can claim your authorized placement agency or by judgment, decree, or other order daughter as a qualifying child for all of the six tax benefits listed of any court of competent jurisdiction. For more details on author- here for which you otherwise qualify. Your mother cannot claim ized placement agencies, see Pub. 596. any of the six tax benefits listed here unless she has a different

qualifying child. However, if your mother’s AGI is higher than Married child. A child who was married at the end of 2011 is a yours and you do not claim your daughter as a qualifying child, qualifying child only if (a) you can claim him or her as your your daughter is the qualifying child of your mother. dependent on Form 1040, line 6c, or (b) you could have claimed

For more details and examples, see Pub. 596.him or her as your dependent except for the special rule for Children of divorced or separated parents in the instructions for line 6c. If you will not be taking the EIC with a qualifying child, enter

“No” on the dotted line next to line 64a. Otherwise, go to Step 3,Members of the military. If you were on extended active duty question 1.outside the United States, your main home is considered to be in the United States during that duty period. Extended active duty is Social security number (SSN). For the EIC, a valid SSN is a num-military duty ordered for an indefinite period or for a period of more ber issued by the Social Security Administration unless “Not Validthan 90 days. Once you begin serving extended active duty, you are for Employment” is printed on the social security card and theconsidered to be on extended active duty even if you do not serve number was issued solely to apply for or receive a federally fundedmore than 90 days. benefit.

To find out how to get an SSN, see Social Security NumberNonresident aliens. If your filing status is married filing jointly, go (SSN) near the beginning of these instructions. If you will not haveto Step 2. Otherwise, stop; you cannot take the EIC. Enter “No” on an SSN by the date your return is due, see What if You Cannot Filethe dotted line next to line 64a. on Time?

Permanently and totally disabled. A person is permanently and Student. A student is a child who during any part of 5 calendar totally disabled if, at any time in 2011, the person could not engage months of 2011 was enrolled as a full-time student at a school, or in any substantial gainful activity because of a physical or mental took a full-time, on-farm training course given by a school or a condition and a doctor has determined that this condition (a) has state, county, or local government agency. A school includes a lasted or can be expected to last continuously for at least a year, or technical, trade, or mechanical school. It does not include an (b) can be expected to lead to death. on-the-job training course, correspondence school, or school offer-

ing courses only through the Internet. Qualifying child of more than one person. Even if a child meets the conditions to be the qualifying child of more than one person, only Welfare benefits, effect of credit on. Any refund you receive as a one person can claim the child as a qualifying child for all of the result of taking the EIC cannot be counted as income when deter- following tax benefits, unless the special rule for Children of di- mining if you or anyone else is eligible for benefits or assistance, or vorced or separated parents in the instructions for line 6c applies. how much you or anyone else can receive, under any federal pro-

gram or under any state or local program financed in whole or in1. Dependency exemption (line 6c). part with federal funds. These programs include Temporary Assis-2. Child tax credits (lines 51 and 65). tance for Needy Families (TANF), Medicaid, Supplemental Secur-

3. Head of household filing status (line 4). ity Income (SSI), and Supplemental Nutrition Assistance Program 4. Credit for child and dependent care expenses (line 48). (food stamps). In addition, when determining eligibility, the refund

cannot be counted as a resource for at least 12 months after you5. Exclusion for dependent care benefits (Form 2441, Part III). receive it. Check with your local benefit coordinator to find out if6. Earned income credit (lines 64a and 64b). your refund will affect your benefits.

No other person can take any of the six tax benefits listed above unless he or she has a different qualifying child. If you and any other person can claim the child as a qualifying child, the following rules apply.

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AWorksheet —2011 EIC—Lines 64a and 64b

1040

Yes. Skip line 5; enter the amount from line 2 on line 6.

STOP

Keep for Your Records

Before you begin:

1.

2.

3.

4.

5.

1Enter your earned income from Step 5.

Enter the amount from Form 1040, line 38.

Are the amounts on lines 3 and 1 the same?

No. Go to line 5.

If you have:

Yes. Leave line 5 blank; enter the amount from line 2 on line 6.

No. Look up the amount on line 3 in the EIC Table to find the credit. Be sure you use the correct column for your filing status and the number of children you have. Enter the credit here.

Enter this amount on Form 1040, line 64a.

3

6 Part 3

Part 1

Part 2

All Filers Using Worksheet A

Filers Who Answered “No” on Line 4

Your Earned Income Credit

2

● No qualifying children, is the amount on line 3 less than $7,600 ($12,700 if married filing jointly)?

● 1 or more qualifying children, is the amount on line 3 less than $16,700 ($21,800 if married filing jointly)?

Look at the amounts on lines 5 and 2. Then, enter the smaller amount on line 6.

5

6. This is your earned income credit.

Reminder—

If you have a qualifying child, complete and attach Schedule EIC.

If your EIC for a year after 1996 was reduced or disallowed, see Form 8862, who must file, earlier, to find out if you must file Form 8862 to take the credit for 2011.

EIC

1040

CAUTION

Be sure you are using the correct worksheet. Use this worksheet only if you answered “No” to Step 5, question 3. Otherwise, use Worksheet B.

Look up the amount on line 1 above in the EIC Table (right after Worksheet B) to find the credit. Be sure you use the correct column for your filing status and the number of children you have. Enter the credit here.

If line 2 is zero, You cannot take the credit. Enter “No” on the dotted line next to line 64a.

- 49 - Need more information or forms? Visit IRS.gov.

BWorksheet —2011 EIC—Lines 64a and 64b

STOP

Keep for Your Records

Use this worksheet if you answered “Yes” to Step 5, question 3. Complete the parts below (Parts 1 through 3) that apply to you. Then, continue to Part 4.

1a.

2.

3.

1a Enter the amount from Schedule SE, Section A, line 3, or Section B, line 3, whichever applies.

Subtract line 1d from 1c.

Do not include on these lines any statutory employee income, any net profit from services performed as a notary public, any amount exempt from self-employment tax as the result of the filing and approval of Form 4029 or Form 4361, or any other amounts exempt from self-employment tax.

Yes. If you want the IRS to figure your credit, see Credit figured by the IRS, earlier. If you want to figure the credit yourself, enter the amount from line 4b on line 6 of this worksheet.

Part 3

Part 1

Part 2

Self-Employed, Members of the Clergy, and People With Church Employee Income Filing Schedule SE

Self-Employed NOT Required To File Schedule SE

Statutory Employees Filing Schedule C or C-EZ

● 2 qualifying children, is line 4b less than $40,964 ($46,044 if married filing jointly)? ● 1 qualifying child, is line 4b less than $36,052 ($41,132 if married filing jointly)?

If you are married filing a joint return, include your spouse’s amounts, if any, with yours to figure the amounts to enter in Parts 1 through 3.

1e

c.

d.

e.

1c

Enter any amount from Schedule SE, Section B, line 4b, and line 5a.

1d

Combine lines 1a and 1b.

Enter the amount from Schedule SE, Section A, line 6, or Section B, line 13, whichever applies.

=

=

For example, your net earnings from self-employment were less than $400.

a. 2aEnter any net farm profit or (loss) from Schedule F, line 34, and from farm partnerships, Schedule K-1 (Form 1065), box 14, code A*.

b.

2b

Enter any net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1*.

+

Combine lines 2a and 2b. 2cc. =

Enter the amount from Schedule C, line 1c, or Schedule C-EZ, line 1c, that you are filing as a statutory employee.

3

Part 4

All Filers Using Worksheet B

Note. If line 4b includes income on which you should have paid self- employment tax but did not, we may reduce your credit by the amount of self-employment tax not paid.

4a. Enter your earned income from Step 5.

4b b. Combine lines 1e, 2c, 3, and 4a. This is your total earned income.

5. If you have:

● No qualifying children, is line 4b less than $13,660 ($18,740 if married filing jointly)?

No. You cannot take the credit. Enter “No” on the dotted line next to line 64a.

*If you have any Schedule K-1 amounts, complete the appropriate line(s) of Schedule SE, Section A. Reduce the Schedule K-1 amounts as described in the Partner’s Instructions for Schedule K-1. Enter your name and social security number on Schedule SE and attach it to your return.

If line 4b is zero or less, You cannot take the credit. Enter “No” on the dotted line next to line 64a.

4a

STOP

● 3 or more qualifying children, is line 4b less than $43,998 ($49,078 if married filing jointly)?

b. 1b+

–

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BWorksheet —2011 EIC—Lines 64a and 64b—Continued

1040

Skip line 10; enter the amount from line 7 on line 11.Yes.

STOP

Keep for Your Records

6.

7.

8.

9.

10.

6Enter your total earned income from Part 4, line 4b.

Look up the amount on line 6 above in the EIC Table to find the credit. Be sure you use the correct column for your filing status and the number of children you have. Enter the credit here.

Enter the amount from Form 1040, line 38.

Are the amounts on lines 8 and 6 the same?

Go to line 10.No.

If you have:

Leave line 10 blank; enter the amount from line 7 on line 11.Yes.

No. Look up the amount on line 8 in the EIC Table to find the credit. Be sure you use the correct column for your filing status and the number of children you have. Enter the credit here.

Enter this amount on Form 1040, line 64a.

8

11

Part 5

Part 7

All Filers Using Worksheet B

Your Earned Income Credit

7

If line 7 is zero, You cannot take the credit. Enter “No” on the dotted line next to line 64a.

● No qualifying children, is the amount on line 8 less than $7,600 ($12,700 if married filing jointly)?

● 1 or more qualifying children, is the amount on line 8 less than $16,700 ($21,800 if married filing jointly)?

Look at the amounts on lines 10 and 7. Then, enter the smaller amount on line 11.

10

This is your earned income credit.

Reminder—

If you have a qualifying child, complete and attach Schedule EIC.

If your EIC for a year after 1996 was reduced or disallowed, see Form 8862, who must file, earlier, to find out if you must file Form 8862 to take the credit for 2011.

EIC

1040

Part 6

Filers Who Answered “No” on Line 9

CAUTION

11.

- 51 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table Caution. not 1. 2. Example.

At least But less than

Two children

Your credit is—

One child

And your filing status is—

No children

If the amount you are looking up from the worksheet is—

Single, head of household, or qualifying widow(er) and you have—

2,400 2,450 186 825 970 2,450 2,500 189 842 990

Three children

1,091 1,114

And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

$1 $50 50 100

100 150 150 200 200 250

250 300 300 350 350 400 400 450 450 500

500 550 550 600 600 650 650 700 700 750

750 800 800 850 850 900 900 950 950 1,000

1,000 1,050 1,050 1,100 1,100 1,150 1,150 1,200 1,200 1,250

1,250 1,300 1,300 1,350 1,350 1,400 1,400 1,450 1,450 1,500

1,500 1,550 1,550 1,600 1,600 1,650 1,650 1,700 1,700 1,750

1,750 1,800 1,800 1,850 1,850 1,900 1,900 1,950 1,950 2,000

2,000 2,050 2,050 2,100 2,100 2,150 2,150 2,200 2,200 2,250

2,250 2,300 2,300 2,350 2,350 2,400 2,400 2,450 2,450 2,500

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Need more information or forms? Visit IRS.gov. - 52 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

2,500 2,550 2,550 2,600 2,600 2,650 2,650 2,700 2,700 2,750

2,750 2,800 2,800 2,850 2,850 2,900 2,900 2,950 2,950 3,000

3,000 3,050 3,050 3,100 3,100 3,150 3,150 3,200 3,200 3,250

3,250 3,300 3,300 3,350 3,350 3,400 3,400 3,450 3,450 3,500

3,500 3,550 3,550 3,600 3,600 3,650 3,650 3,700 3,700 3,750

3,750 3,800 3,800 3,850 3,850 3,900 3,900 3,950 3,950 4,000

4,000 4,050 4,050 4,100 4,100 4,150 4,150 4,200 4,200 4,250

4,250 4,300 4,300 4,350 4,350 4,400 4,400 4,450 4,450 4,500

4,500 4,550 4,550 4,600 4,600 4,650 4,650 4,700 4,700 4,750

4,750 4,800 4,800 4,850 4,850 4,900 4,900 4,950 4,950 5,000

5,000 5,050 5,050 5,100 5,100 5,150 5,150 5,200 5,200 5,250

5,250 5,300 5,300 5,350 5,350 5,400 5,400 5,450 5,450 5,500

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- 53 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

5,500 5,550 5,550 5,600 5,600 5,650 5,650 5,700 5,700 5,750

5,750 5,800 5,800 5,850 5,850 5,900 5,900 5,950 5,950 6,000

6,000 6,050 6,050 6,100 6,100 6,150 6,150 6,200 6,200 6,250

6,250 6,300 6,300 6,350 6,350 6,400 6,400 6,450 6,450 6,500

6,500 6,550 6,550 6,600 6,600 6,650 6,650 6,700 6,700 6,750

6,750 6,800 6,800 6,850 6,850 6,900 6,900 6,950 6,950 7,000

7,000 7,050 7,050 7,100 7,100 7,150 7,150 7,200 7,200 7,250

7,250 7,300 7,300 7,350 7,350 7,400 7,400 7,450 7,450 7,500

7,500 7,550 7,550 7,600 7,600 7,650 7,650 7,700 7,700 7,750

7,750 7,800 7,800 7,850 7,850 7,900 7,900 7,950 7,950 8,000

8,000 8,050 8,050 8,100 8,100 8,150 8,150 8,200 8,200 8,250

8,250 8,300 8,300 8,350 8,350 8,400 8,400 8,450 8,450 8,500

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Need more information or forms? Visit IRS.gov. - 54 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

8,500 8,550 8,550 8,600 8,600 8,650 8,650 8,700 8,700 8,750

8,750 8,800 8,800 8,850 8,850 8,900 8,900 8,950 8,950 9,000

9,000 9,050 9,050 9,100 9,100 9,150 9,150 9,200 9,200 9,250

9,250 9,300 9,300 9,350 9,350 9,400 9,400 9,450 9,450 9,500

9,500 9,550 9,550 9,600 9,600 9,650 9,650 9,700 9,700 9,750

9,750 9,800 9,800 9,850 9,850 9,900 9,900 9,950 9,950 10,000

10,000 10,050 10,050 10,100 10,100 10,150 10,150 10,200 10,200 10,250

10,250 10,300 10,300 10,350 10,350 10,400 10,400 10,450 10,450 10,500

10,500 10,550 10,550 10,600 10,600 10,650 10,650 10,700 10,700 10,750

10,750 10,800 10,800 10,850 10,850 10,900 10,900 10,950 10,950 11,000

11,000 11,050 11,050 11,100 11,100 11,150 11,150 11,200 11,200 11,250

11,250 11,300 11,300 11,350 11,350 11,400 11,400 11,450 11,450 11,500

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- 55 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

11,500 11,550 11,550 11,600 11,600 11,650 11,650 11,700 11,700 11,750

11,750 11,800 11,800 11,850 11,850 11,900 11,900 11,950 11,950 12,000

12,000 12,050 12,050 12,100 12,100 12,150 12,150 12,200 12,200 12,250

12,250 12,300 12,300 12,350 12,350 12,400 12,400 12,450 12,450 12,500

12,500 12,550 12,550 12,600 12,600 12,650 12,650 12,700 12,700 12,750

12,750 12,800 12,800 12,850 12,850 12,900 12,900 12,950 12,950 13,000

13,000 13,050 13,050 13,100 13,100 13,150 13,150 13,200 13,200 13,250

13,250 13,300 13,300 13,350 13,350 13,400 13,400 13,450 13,450 13,500

13,500 13,550 13,550 13,600 13,600 13,650 13,650 13,700 13,700 13,750

13,750 13,800 13,800 13,850 13,850 13,900 13,900 13,950 13,950 14,000

14,000 14,050 14,050 14,100 14,100 14,150 14,150 14,200 14,200 14,250

14,250 14,300 14,300 14,350 14,350 14,400 14,400 14,450 14,450 14,500

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Need more information or forms? Visit IRS.gov. - 56 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

14,500 14,550 14,550 14,600 14,600 14,650 14,650 14,700 14,700 14,750

14,750 14,800 14,800 14,850 14,850 14,900 14,900 14,950 14,950 15,000

15,000 15,050 15,050 15,100 15,100 15,150 15,150 15,200 15,200 15,250

15,250 15,300 15,300 15,350 15,350 15,400 15,400 15,450 15,450 15,500

15,500 15,550 15,550 15,600 15,600 15,650 15,650 15,700 15,700 15,750

15,750 15,800 15,800 15,850 15,850 15,900 15,900 15,950 15,950 16,000

16,000 16,050 16,050 16,100 16,100 16,150 16,150 16,200 16,200 16,250

16,250 16,300 16,300 16,350 16,350 16,400 16,400 16,450 16,450 16,500

16,500 16,550 16,550 16,600 16,600 16,650 16,650 16,700 16,700 16,750

16,750 16,800 16,800 16,850 16,850 16,900 16,900 16,950 16,950 17,000

17,000 17,050 17,050 17,100 17,100 17,150 17,150 17,200 17,200 17,250

17,250 17,300 17,300 17,350 17,350 17,400 17,400 17,450 17,450 17,500

��� �� ���

- 57 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

17,500 17,550 17,550 17,600 17,600 17,650 17,650 17,700 17,700 17,750

17,750 17,800 17,800 17,850 17,850 17,900 17,900 17,950 17,950 18,000

18,000 18,050 18,050 18,100 18,100 18,150 18,150 18,200 18,200 18,250

18,250 18,300 18,300 18,350 18,350 18,400 18,400 18,450 18,450 18,500

18,500 18,550 18,550 18,600 18,600 18,650 18,650 18,700 18,700 18,750

18,750 18,800 18,800 18,850 18,850 18,900 18,900 18,950 18,950 19,000

19,000 19,050 19,050 19,100 19,100 19,150 19,150 19,200 19,200 19,250

19,250 19,300 19,300 19,350 19,350 19,400 19,400 19,450 19,450 19,500

19,500 19,550 19,550 19,600 19,600 19,650 19,650 19,700 19,700 19,750

19,750 19,800 19,800 19,850 19,850 19,900 19,900 19,950 19,950 20,000

20,000 20,050 20,050 20,100 20,100 20,150 20,150 20,200 20,200 20,250

20,250 20,300 20,300 20,350 20,350 20,400 20,400 20,450 20,450 20,500

��� �� ���

Need more information or forms? Visit IRS.gov. - 58 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

20,500 20,550 20,550 20,600 20,600 20,650 20,650 20,700 20,700 20,750

20,750 20,800 20,800 20,850 20,850 20,900 20,900 20,950 20,950 21,000

21,000 21,050 21,050 21,100 21,100 21,150 21,150 21,200 21,200 21,250

21,250 21,300 21,300 21,350 21,350 21,400 21,400 21,450 21,450 21,500

21,500 21,550 21,550 21,600 21,600 21,650 21,650 21,700 21,700 21,750

21,750 21,800 21,800 21,850 21,850 21,900 21,900 21,950 21,950 22,000

22,000 22,050 22,050 22,100 22,100 22,150 22,150 22,200 22,200 22,250

22,250 22,300 22,300 22,350 22,350 22,400 22,400 22,450 22,450 22,500

22,500 22,550 22,550 22,600 22,600 22,650 22,650 22,700 22,700 22,750

22,750 22,800 22,800 22,850 22,850 22,900 22,900 22,950 22,950 23,000

23,000 23,050 23,050 23,100 23,100 23,150 23,150 23,200 23,200 23,250

23,250 23,300 23,300 23,350 23,350 23,400 23,400 23,450 23,450 23,500

��� �� ���

- 59 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

23,500 23,550 23,550 23,600 23,600 23,650 23,650 23,700 23,700 23,750

23,750 23,800 23,800 23,850 23,850 23,900 23,900 23,950 23,950 24,000

24,000 24,050 24,050 24,100 24,100 24,150 24,150 24,200 24,200 24,250

24,250 24,300 24,300 24,350 24,350 24,400 24,400 24,450 24,450 24,500

24,500 24,550 24,550 24,600 24,600 24,650 24,650 24,700 24,700 24,750

24,750 24,800 24,800 24,850 24,850 24,900 24,900 24,950 24,950 25,000

25,000 25,050 25,050 25,100 25,100 25,150 25,150 25,200 25,200 25,250

25,250 25,300 25,300 25,350 25,350 25,400 25,400 25,450 25,450 25,500

25,500 25,550 25,550 25,600 25,600 25,650 25,650 25,700 25,700 25,750

25,750 25,800 25,800 25,850 25,850 25,900 25,900 25,950 25,950 26,000

26,000 26,050 26,050 26,100 26,100 26,150 26,150 26,200 26,200 26,250

26,250 26,300 26,300 26,350 26,350 26,400 26,400 26,450 26,450 26,500

��� �� ���

Need more information or forms? Visit IRS.gov. - 60 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

26,500 26,550 26,550 26,600 26,600 26,650 26,650 26,700 26,700 26,750

26,750 26,800 26,800 26,850 26,850 26,900 26,900 26,950 26,950 27,000

27,000 27,050 27,050 27,100 27,100 27,150 27,150 27,200 27,200 27,250

27,250 27,300 27,300 27,350 27,350 27,400 27,400 27,450 27,450 27,500

27,500 27,550 27,550 27,600 27,600 27,650 27,650 27,700 27,700 27,750

27,750 27,800 27,800 27,850 27,850 27,900 27,900 27,950 27,950 28,000

28,000 28,050 28,050 28,100 28,100 28,150 28,150 28,200 28,200 28,250

28,250 28,300 28,300 28,350 28,350 28,400 28,400 28,450 28,450 28,500

28,500 28,550 28,550 28,600 28,600 28,650 28,650 28,700 28,700 28,750

28,750 28,800 28,800 28,850 28,850 28,900 28,900 28,950 28,950 29,000

29,000 29,050 29,050 29,100 29,100 29,150 29,150 29,200 29,200 29,250

29,250 29,300 29,300 29,350 29,350 29,400 29,400 29,450 29,450 29,500

��� �� ���

- 61 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

29,500 29,550 29,550 29,600 29,600 29,650 29,650 29,700 29,700 29,750

29,750 29,800 29,800 29,850 29,850 29,900 29,900 29,950 29,950 30,000

30,000 30,050 30,050 30,100 30,100 30,150 30,150 30,200 30,200 30,250

30,250 30,300 30,300 30,350 30,350 30,400 30,400 30,450 30,450 30,500

30,500 30,550 30,550 30,600 30,600 30,650 30,650 30,700 30,700 30,750

30,750 30,800 30,800 30,850 30,850 30,900 30,900 30,950 30,950 31,000

31,000 31,050 31,050 31,100 31,100 31,150 31,150 31,200 31,200 31,250

31,250 31,300 31,300 31,350 31,350 31,400 31,400 31,450 31,450 31,500

31,500 31,550 31,550 31,600 31,600 31,650 31,650 31,700 31,700 31,750

31,750 31,800 31,800 31,850 31,850 31,900 31,900 31,950 31,950 32,000

32,000 32,050 32,050 32,100 32,100 32,150 32,150 32,200 32,200 32,250

32,250 32,300 32,300 32,350 32,350 32,400 32,400 32,450 32,450 32,500

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Need more information or forms? Visit IRS.gov. - 62 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

32,500 32,550 32,550 32,600 32,600 32,650 32,650 32,700 32,700 32,750

32,750 32,800 32,800 32,850 32,850 32,900 32,900 32,950 32,950 33,000

33,000 33,050 33,050 33,100 33,100 33,150 33,150 33,200 33,200 33,250

33,250 33,300 33,300 33,350 33,350 33,400 33,400 33,450 33,450 33,500

33,500 33,550 33,550 33,600 33,600 33,650 33,650 33,700 33,700 33,750

33,750 33,800 33,800 33,850 33,850 33,900 33,900 33,950 33,950 34,000

34,000 34,050 34,050 34,100 34,100 34,150 34,150 34,200 34,200 34,250

34,250 34,300 34,300 34,350 34,350 34,400 34,400 34,450 34,450 34,500

34,500 34,550 34,550 34,600 34,600 34,650 34,650 34,700 34,700 34,750

34,750 34,800 34,800 34,850 34,850 34,900 34,900 34,950 34,950 35,000

35,000 35,050 35,050 35,100 35,100 35,150 35,150 35,200 35,200 35,250

35,250 35,300 35,300 35,350 35,350 35,400 35,400 35,450 35,450 35,500

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- 63 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

35,500 35,550 35,550 35,600 35,600 35,650 35,650 35,700 35,700 35,750

35,750 35,800 35,800 35,850 35,850 35,900 35,900 35,950 35,950 36,000

36,000 36,050 36,050 36,100 36,100 36,150 36,150 36,200 36,200 36,250

36,250 36,300 36,300 36,350 36,350 36,400 36,400 36,450 36,450 36,500

36,500 36,550 36,550 36,600 36,600 36,650 36,650 36,700 36,700 36,750

36,750 36,800 36,800 36,850 36,850 36,900 36,900 36,950 36,950 37,000

37,000 37,050 37,050 37,100 37,100 37,150 37,150 37,200 37,200 37,250

37,250 37,300 37,300 37,350 37,350 37,400 37,400 37,450 37,450 37,500

37,500 37,550 37,550 37,600 37,600 37,650 37,650 37,700 37,700 37,750

37,750 37,800 37,800 37,850 37,850 37,900 37,900 37,950 37,950 38,000

38,000 38,050 38,050 38,100 38,100 38,150 38,150 38,200 38,200 38,250

38,250 38,300 38,300 38,350 38,350 38,400 38,400 38,450 38,450 38,500

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Need more information or forms? Visit IRS.gov. - 64 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

38,500 38,550 38,550 38,600 38,600 38,650 38,650 38,700 38,700 38,750

38,750 38,800 38,800 38,850 38,850 38,900 38,900 38,950 38,950 39,000

39,000 39,050 39,050 39,100 39,100 39,150 39,150 39,200 39,200 39,250

39,250 39,300 39,300 39,350 39,350 39,400 39,400 39,450 39,450 39,500

39,500 39,550 39,550 39,600 39,600 39,650 39,650 39,700 39,700 39,750

39,750 39,800 39,800 39,850 39,850 39,900 39,900 39,950 39,950 40,000

40,000 40,050 40,050 40,100 40,100 40,150 40,150 40,200 40,200 40,250

40,250 40,300 40,300 40,350 40,350 40,400 40,400 40,450 40,450 40,500

40,500 40,550 40,550 40,600 40,600 40,650 40,650 40,700 40,700 40,750

40,750 40,800 40,800 40,850 40,850 40,900 40,900 40,950 40,950 41,000

41,000 41,050 41,050 41,100 41,100 41,150 41,150 41,200 41,200 41,250

41,250 41,300 41,300 41,350 41,350 41,400 41,400 41,450 41,450 41,500

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- 65 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

41,500 41,550 41,550 41,600 41,600 41,650 41,650 41,700 41,700 41,750

41,750 41,800 41,800 41,850 41,850 41,900 41,900 41,950 41,950 42,000

42,000 42,050 42,050 42,100 42,100 42,150 42,150 42,200 42,200 42,250

42,250 42,300 42,300 42,350 42,350 42,400 42,400 42,450 42,450 42,500

42,500 42,550 42,550 42,600 42,600 42,650 42,650 42,700 42,700 42,750

42,750 42,800 42,800 42,850 42,850 42,900 42,900 42,950 42,950 43,000

43,000 43,050 43,050 43,100 43,100 43,150 43,150 43,200 43,200 43,250

43,250 43,300 43,300 43,350 43,350 43,400 43,400 43,450 43,450 43,500

43,500 43,550 43,550 43,600 43,600 43,650 43,650 43,700 43,700 43,750

43,750 43,800 43,800 43,850 43,850 43,900 43,900 43,950 43,950 44,000

44,000 44,050 44,050 44,100 44,100 44,150 44,150 44,200 44,200 44,250

44,250 44,300 44,300 44,350 44,350 44,400 44,400 44,450 44,450 44,500

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Need more information or forms? Visit IRS.gov. - 66 -

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

44,500 44,550 44,550 44,600 44,600 44,650 44,650 44,700 44,700 44,750

44,750 44,800 44,800 44,850 44,850 44,900 44,900 44,950 44,950 45,000

45,000 45,050 45,050 45,100 45,100 45,150 45,150 45,200 45,200 45,250

45,250 45,300 45,300 45,350 45,350 45,400 45,400 45,450 45,450 45,500

45,500 45,550 45,550 45,600 45,600 45,650 45,650 45,700 45,700 45,750

45,750 45,800 45,800 45,850 45,850 45,900 45,900 45,950 45,950 46,000

46,000 46,050 46,050 46,100 46,100 46,150 46,150 46,200 46,200 46,250

46,250 46,300 46,300 46,350 46,350 46,400 46,400 46,450 46,450 46,500

46,500 46,550 46,550 46,600 46,600 46,650 46,650 46,700 46,700 46,750

46,750 46,800 46,800 46,850 46,850 46,900 46,900 46,950 46,950 47,000

47,000 47,050 47,050 47,100 47,100 47,150 47,150 47,200 47,200 47,250

47,250 47,300 47,300 47,350 47,350 47,400 47,400 47,450 47,450 47,500

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- 67 - Need more information or forms? Visit IRS.gov.

2011 Earned Income Credit (EIC) Table–�� �� �� Caution. not And your filing status is –

If the amount you are looking up Single, head of household, or qualifying widow(er) Married filing jointly and you have – from the worksheet is – and you have –

Your credit is – Your credit is –

47,500 47,550 47,550 47,600 47,600 47,650 47,650 47,700 47,700 47,750

47,750 47,800 47,800 47,850 47,850 47,900 47,900 47,950 47,950 48,000

48,000 48,050 48,050 48,100 48,100 48,150 48,150 48,200 48,200 48,250

48,250 48,300 48,300 48,350 48,350 48,400 48,400 48,450 48,450 48,500

48,500 48,550 48,550 48,600 48,600 48,650 48,650 48,700 48,700 48,750

48,750 48,800 48,800 48,850 48,850 48,900 48,900 48,950 48,950 49,000

49,000 49,050 49,050 49,078

Need more information or forms? Visit IRS.gov. - 68 -

2011 Form 1040—Lines 65 Through 74a

If the amount you overpaid isYou may be able to deduct anyLine 65 large, you may want to decreasecredit or debit card convenience the amount of income tax with-fees on your 2012 Schedule A.

TIP Additional Child Tax Credit

TIP held from your pay by filing a

new Form W-4. See Income Tax Withhold- What Is the Additional Child Tax ing and Estimated Tax Payments for 2012 Credit? under General Information, later.Line 69This credit is for certain people who have at

Refund Offsetleast one qualifying child as defined in the Excess Social Security and instructions for line 6c. The additional If you owe past-due federal tax, state in-Tier 1 RRTA Tax Withheldchild tax credit may give you a refund even come tax, state unemployment compensa- if you do not owe any tax. If you, or your spouse if filing a joint re- tion debts, child support, spousal support,

turn, had more than one employer for 2011 or certain federal nontax debts, such as stu-Two Steps To Take the Additional and total wages of more than $106,800, too dent loans, all or part of the overpayment Child Tax Credit! much social security or tier 1 railroad re- on line 73 may be used (offset) to pay the

tirement (RRTA) tax may have been with- past-due amount. Offsets for federal taxesStep 1. Be sure you figured the amount, if held. You can take a credit on this line for are made by the IRS. All other offsets areany, of your child tax credit. See the in- the amount withheld in excess of made by the Treasury Department’s Finan-structions for line 51.

cial Management Service (FMS). For fed-$4,485.60. But if any one employer with- eral tax offsets, you will receive a noticeheld more than $4,485.60, you cannotStep 2. Read the TIP at the end of your from the IRS. For all other offsets, you willclaim the excess on your return. The em-Child Tax Credit Worksheet. Use Form receive a notice from FMS. To find out ifployer should adjust the tax for you. If the8812 to see if you can take the additional you may have an offset or if you have anyemployer does not adjust the overcollec-child tax credit, but only if you meet the questions about it, contact the agency totion, you can file a claim for refund usingcondition given in that TIP. which you owe the debt.Form 843. Figure this amount separately

for you and your spouse. Injured SpouseLine 66 You cannot claim a refund for excess If you file a joint return and your spousetier 2 RRTA tax on Form 1040. Instead, use has not paid past-due federal tax, state in-American Opportunity Credit Form 843. come tax, state unemployment compensa-If you meet the requirements to claim an tion debts, child support, spousal support,For more details, see Pub. 505.education credit (see the instructions for or a federal nontax debt, such as a student

line 49), enter on line 66 the amount, if any, loan, part or all of the overpayment on line from Form 8863, line 14. 73 may be used (offset) to pay the past-due

Line 70 amount. But your part of the overpayment may be refunded to you if certain condi-Credit for Federal Tax on tions apply and you complete Form 8379.Line 67 For details, use TeleTax topic 203 or seeFuels Form 8379.First-Time Homebuyer Credit Enter any credit for federal excise taxes

paid on fuels that are ultimately used for aYou can claim this credit only if: nontaxable purpose (for example, an• You (or your spouse if married) were off-highway business use). Attach Form Lines 74a Through 74da member of the uniformed services or For- 4136.eign Service, or an employee of the intelli- Amount Refunded to Yougence community, on qualified official

If you want to check the status of yourextended duty outside the United States for refund, see Refund Information, later.at least 90 days during the period beginning Line 71 Before checking the status of your refund,after December 31, 2008, and ending

Check the box(es) on line 71 to report any please wait at least 72 hours after IRS ac-before May 1, 2010, and credit from Form 2439, 8839, 8801 (line knowledges receipt of your e-filed return (3• You bought a main home in the 27), or 8885. If you claim more than one of to 4 weeks after you mail a paper return).

United States in 2011 before May 1. these credits, enter the total on line 71. But if you filed Form 5405, 8379, or 8839 with your return, allow 14 weeks (11 weeksFor more details and additional require- If you are claiming a credit for repay- if you filed electronically).ments, see Form 5405 and its instructions. ment of amounts you included in your in-

come in an earlier year because it appeared Effect of refund on benefits. Any refund you had a right to the income, include the you receive cannot be counted as income credit on line 71 and enter “I.R.C. 1341” to when determining if you or anyone else isLine 68 the right of line 71. See Pub. 525 for details eligible for benefits or assistance, or how

Amount Paid With Request about this credit. much you or anyone else can receive, under any federal program or under any state orfor Extension To File local program financed in whole or in part

If you filed Form 4868 to get an automatic with federal funds. These programs include extension of time to file Form 1040, enter Temporary Assistance for Needy FamiliesRefundany amount you paid with that form or by (TANF), Medicaid, Supplemental Security electronic funds withdrawal, credit or debit Income (SSI), and Supplemental Nutrition card, or the Electronic Federal Tax Pay- Assistance Program (food stamps). In addi-Line 73ment System (EFTPS). If you paid by tion, when determining eligibility, the re- credit or debit card, do not include on line fund cannot be counted as a resource for atAmount Overpaid68 the convenience fee you were charged. least 12 months after you receive it. Check

with your local benefit coordinator to findAlso, include any amounts paid with Form If line 73 is under $1, we will send a refund out if your refund will affect your benefits.2350. only on written request.

- 69 - Need more information or forms? Visit IRS.gov.

Do not include the check number.

1234

SA M

PL E

TONY MAPLE JENNIFER MAPLE 123 Pear Lane Anyplace, GA 00000

15-0000/0000

PAY TO THE ORDER OF $

DOLLARS

ANYPLACE BANK Anyplace, GA 00000

For

|:250250025|:202020"’86". 1234

The routing and account numbers may be in different places on your check.

(line 74b) (line 74d)

Routing number

Account number

�

�

Sample Check—Lines 74b Through 74d

CAUTION

2011 Form 1040—Lines 74a Through 74d

is not an IRA contribution for 2011. In that Ask your financial institution for the case, you must file an amended 2011 return correct routing number to enter on line 74bSimple. Safe. Secure.

DIRECT DEPOSIT

and reduce any IRA deduction and any re- if:Fast Refunds! Choose direct tirement savings contributions credit you • The routing number on a deposit slipdeposit—a fast, simple, safe, secure claimed. is different from the routing number onway to have your refund deposited your checks,automatically to your checking or You and your spouse, if filing • Your deposit is to a savings accountsavings account, including an jointly, each may be able to that does not allow you to write checks, orindividual retirement arrangement contribute up to $5,000 ($6,000CAUTION! • Your checks state they are payableif age 50 or older at the end of(IRA). See the information about IRAs through a financial institution different2011) to a traditional IRA or Roth IRA forlater. from the one at which you have your check-2011. The limit for 2012 is also $5,000 ing account.($6,000 if age 50 or older at the end of

If you want us to directly deposit the 2012). You may owe a penalty if your con- Line 74c amount shown on line 74a to your checking tributions exceed these limits.

Check the appropriate box for the type ofor savings account, including an IRA, at a account. Do not check more than one box.For more information on IRAs, see Pub.bank or other financial institution (such as a If the deposit is to an account such as an590.mutual fund, brokerage firm, or credit IRA, health savings account, brokerage ac-union) in the United States: count, or other similar account, ask yourTreasuryDirect®. You can request a de-• Complete lines 74b through 74d (if financial institution whether you shouldposit of your refund (or part of it) to ayou want your refund deposited to only one check the “Checking” or “Savings” box.TreasuryDirect® online account to buyaccount), or You must check the correct box to ensureU.S. Treasury marketable securities and• Check the box on line 74a and attach your deposit is accepted. For asavings bonds. For more information, go to

Form 8888 if you want to split the direct TreasuryDirect® online account, check thewww.treasurydirect.gov. deposit of your refund into more than one “Savings” box. account or use all or part of your refund to Form 8888. You can have your refund di- Line 74dbuy paper series I savings bonds. rectly deposited into more than one account

The account number can be up to 17 char-or use it to buy up to $5,000 in paper seriesIf you do not want your refund directly acters (both numbers and letters). IncludeI savings bonds. You do not need adeposited to your account, do not check the hyphens but omit spaces and special sym-TreasuryDirect® account to do this. Forbox on line 74a. Draw a line through the bols. Enter the number from left to rightmore information, see the Form 8888 in-boxes on lines 74b and 74d. We will send and leave any unused boxes blank. On thestructions.you a check instead. sample check below, the account number is

Line 74a 20202086. Do not include the check num-Why Use Direct Deposit? ber.• You get your refund faster by direct You cannot file Form 8888 to split your

deposit than you do by check. refund into more than one account or buy If the direct deposit to your account(s) is paper series I savings bonds if Form 8379 is different from the amount you expected,• Payment is more secure. There is no filed with your return. you will receive an explanation in the mailcheck that can get lost or stolen.

about 2 weeks after your refund is depos-• It is more convenient. You do not Line 74b ited.have to make a trip to the bank to deposit The routing number must be nine digits.your check. Reasons Your Direct Deposit The first two digits must be 01 through 12 Request May Be Rejected• It saves tax dollars. It costs the gov- or 21 through 32. On the sample checkernment less to refund by direct deposit. If any of the following apply, your directbelow, the routing number is 250250025.

deposit request will be rejected and a checkTony and Jennifer Maple would use thatIf you file a joint return and will be sent instead.routing number unless their financial insti-check the box on line 74a and

tution instructed them to use a different • Any numbers or letters on lines 74battach Form 8888 or fill in linesCAUTION! routing number for direct deposits. through 74d are crossed out or whited out.74b through 74d, your spouse

may get at least part of the refund.

IRA. You can have your refund (or part of it) directly deposited to a traditional IRA, Roth IRA, or SEP-IRA, but not a SIMPLE IRA. You must establish the IRA at a bank or other financial institution before you re- quest direct deposit. Make sure your direct deposit will be accepted. You must also notify the trustee or custodian of your ac- count of the year to which the deposit is to be applied (unless the trustee or custodian will not accept a deposit for 2011). If you do not, the trustee or custodian can assume the deposit is for the year during which you are filing the return. For example, if you file your 2011 return during 2012 and do not notify the trustee or custodian in ad- vance, the trustee or custodian can assume the deposit to your IRA is for 2012. If you designate your deposit to be for 2011, you must verify that the deposit was actually made to the account by the due date of the return (without regard to extensions). If the deposit is not made by that date, the deposit

Need more information or forms? Visit IRS.gov. - 70 -

2011 Form 1040—Lines 74d Through 77

• Your financial institution(s) will not interest and penalty charges, pay as muchLine 76 of the tax as possible when you file. Butallow a joint refund to be deposited to an before requesting an installment agree-individual account. The IRS is not respon- Amount You Owe ment, you should consider other less costlysible if a financial institution rejects a direct alternatives, such as a bank loan or creditdeposit. To save interest and penalties, card payment.pay your taxes in full by April• You request a deposit of your refund

17, 2012. You do not have toto an account that is not in your name (such To ask for an installment agreement, TIP

pay if line 76 is under $1.as your tax preparer’s own account). you can apply online or use Form 9465 or Include any estimated tax penalty from 9465-FS. To apply online, go to IRS.gov• You file your 2011 return after De-

line 77 in the amount you enter on line 76. and click on “Tools” and then “Online Pay-cember 31, 2012. ment Agreement.”You can pay by check, money order,The IRS is not responsible for a

credit or debit card, or EFTPS. Do not in- Extension of time to pay. If paying the taxlost refund if you enter the clude any estimated tax payment for 2012 when it is due would cause you an unduewrong account information. in this payment. Instead, make the esti-CAUTION

! hardship, you can ask for an extension ofCheck with your financial insti-

mated tax payment separately. time to pay by filing Form 1127 by Apriltution to get the correct routing and account 17, 2012. An extension generally will notnumbers and to make sure your direct de- To pay by check or money order. Make be granted for more than 6 months. If youposit will be accepted. your check or money order payable to the pay after April 17, 2012, you will be“United States Treasury” for the full charged interest on the tax not paid by Aprilamount due. Do not send cash. Do not at- 15, 2012. You must pay the tax before thetach the payment to your return. WriteLine 75 extension runs out. If you do not, penalties“2011 Form 1040” and your name, address, may be imposed.daytime phone number, and social securityApplied to Your 2012 number (SSN) on your payment. If you are

Estimated Tax filing a joint return, enter the SSN shown first on your tax return.Enter on line 75 the amount, if any, of the Line 77

overpayment on line 73 you want applied To help us process your payment, enter Estimated Tax Penaltyto your 2012 estimated tax. We will apply the amount on the right side of the check

this amount to your account unless you in- like this: $ XXX.XX. Do not use dashes or You may owe this penalty if: clude a statement requesting us to apply it lines (for example, do not enter “$ XXX–” • Line 76 is at least $1,000 and it isto your spouse’s account. Include your or “$ XXX xx100”). more than 10% of the tax shown on yourspouse’s social security number in the Then, complete Form 1040-V following return, orstatement. the instructions on that form and enclose it • You did not pay enough estimated taxin the envelope with your tax return andThis election to apply part or all by any of the due dates. This is true even ifpayment. Although you do not have to useof the amount overpaid to your you are due a refund.Form 1040-V, doing so allows us to pro-2012 estimated tax cannot be

For most people, the “tax shown on yourcess your payment more accurately and ef-CAUTION !

changed later. return” is the amount on your 2011 Formficiently. 1040, line 61, minus the total of anyBad check or payment. The penalty for amounts shown on lines 64a, 65, 66, 67,writing a bad check to the IRS is $25 or 2% and 70 and Forms 8828, 4137, 5329 (PartsAmount You Owe of the check, whichever is more. This pen- III through VIII only), 8801 (line 27 only),alty also applies to other forms of paymentIRS e-file offers you the 8839, 8885, and 8919. Also subtract fromif the IRS does not receive the funds. Useelectronic payment option line 61 any tax on an excess parachute pay-TeleTax topic 206.of electronic funds withdrawal (EFW). ment, any excise tax on insider stock com-

To pay by credit or debit card or EFTPS.EFW can be used to pay your current year pensation of an expatriated corporation, For information on these payment methods,balance due and can be used to make up to any uncollected social security and Medi- go to www.irs.gov/e-pay. care or RRTA tax on tips or group-term lifefour estimated tax payments. If you are fil-

insurance, any look-back interest due undering early, you can schedule your payment You may need to (a) increase section 167(g) or 460(b), and any write-infor withdrawal from your account on a fu- the amount of income tax with- tax included on line 60 from Form 8885.ture date, up to and including April 17, held from your pay by filing a When figuring the amount on line 61, in-2012. If you file your return after April 17, TIP

new Form W-4, (b) increase the clude household employment taxes only if2012, you can include interest and penalty tax withheld from other income by filing line 62 is more than zero or you would owein your payment. Visit www.irs.gov/e-pay Form W-4P or W-4V, or (c) make esti- the penalty even if you did not includefor details. mated tax payments for 2012. See Income those taxes.You can also pay using EFTPS, a free Tax Withholding and Estimated Tax Pay- tax payment system that allows you to ments for 2012 under General Information, Exception. You will not owe the penalty if make payments online or by phone. For later. your 2010 tax return was for a tax year of more information or details on enrolling, 12 full months and either of the followingWhat If You Cannot Pay?visit www.irs.gov/e-pay or www.eftps.gov applies.

If you cannot pay the full amount shown onor call EFTPS’ Customer Service at 1. You had no tax shown on your 2010line 76 when you file, you can ask for:1-800-316-6541. TTY/TDD help is avail-

return and you were a U.S. citizen or resi-able by calling 1-800-733-4829. • An installment agreement, or dent for all of 2010.• An extension of time to pay. 2. The total of lines 62, 63, and 69 on Installment agreement. Under an install- your 2011 return is at least 100% of the tax ment agreement, you can pay all or part of shown on your 2010 return (110% of that the tax you owe in monthly installments. amount if you are not a farmer or fisher- However, even if your request to pay in man, and your adjusted gross income installments is granted, you will be charged (AGI) shown on your 2010 return was interest and may be charged a late payment more than $150,000 (more than $75,000 if penalty on the tax not paid by April 17, married filing separately for 2011)). Your 2012. You must also pay a fee. To limit the estimated tax payments for 2011 must have

- 71 - Need more information or forms? Visit IRS.gov.

2011 Form 1040—Line 77

been made on time and for the required Party Designee” area of your return. Also, a letter. If you are filing a joint return, you amount. enter the designee’s name, phone number, can enter either your or your spouse’s day-

and any five digits the designee chooses as time phone number. For most people, the “tax shown on your his or her personal identification number

2010 return” is the amount on your 2010 (PIN). Form 1040, line 60, minus the total of any

If you check the “Yes” box, you, andamounts shown on lines 63, 64a, 65, 66, Electronic Returnyour spouse if filing a joint return, are au-and 67 and Forms 8828, 4137, 4136, 5329

thorizing the IRS to call the designee to(Parts III through VIII only), 8801 (line 27 Signatures! answer any questions that may arise duringonly), 8885, and 8919. Also subtract from To file your return electronically, you mustthe processing of your return. You are alsoline 60 any tax on an excess parachute pay- sign the return electronically using a per-authorizing the designee to:ment, any excise tax on insider stock com- sonal identification number (PIN). If youpensation of an expatriated corporation, • Give the IRS any information that is are filing online using software, you mustany uncollected social security and Medi- missing from your return, use a Self-Select PIN. If you are filing elec-care or RRTA tax on tips or group-term life • Call the IRS for information about the tronically using a tax practitioner, you caninsurance, any look-back interest due under processing of your return or the status of use a Self-Select PIN or a Practitioner PIN.section 167(g) or 460(b), and any write-in your refund or payment(s),tax included on line 60 from Form 8885. Self-Select PIN. The Self-Select PIN• Receive copies of notices or tran-When figuring the amount on line 60, in- method allows you to create your own PIN.scripts related to your return, upon request,clude household employment taxes only if If you are married filing jointly, you andandline 61 is more than zero or you would have your spouse will each need to create a PINowed the estimated tax penalty for 2010 • Respond to certain IRS notices about and enter these PINs as your electronic sig-even if you did not include those taxes. But math errors, offsets, and return preparation. natures.if you entered an amount on your 2010

You are not authorizing the designee toSchedule H, line 7, include the total of that A PIN is any combination of five digitsreceive any refund check, bind you to any-amount plus the household employment you choose except five zeros. If you use athing (including any additional tax liabil-taxes on your 2010 Form 1040, line 59. PIN, there is nothing to sign and nothing toity), or otherwise represent you before the mail—not even your Forms W-2.Figuring the Penalty IRS. If you want to expand the designee’s authorization, see Pub. 947.If the Exception just described does not To verify your identity, you will be

apply and you choose to figure the penalty prompted to enter your adjusted gross in-The authorization will automaticallyyourself, use Form 2210 (or 2210-F for come (AGI) from your originally filedend no later than the due date (without re-farmers and fishermen). 2010 federal income tax return, if applica-gard to extensions) for filing your 2012 tax ble. Do not use your AGI from an amendedEnter any penalty on line 77. Add the return. This is April 15, 2013, for most return (Form 1040X) or a math error cor-penalty to any tax due and enter the total on people. If you wish to revoke the authoriza- rection made by IRS. AGI is the amountline 76. tion before it ends, see Pub. 947. shown on your 2010 Form 1040, line 38; However, if you have an overpayment Form 1040A, line 22; or Form 1040EZ,

on line 73, subtract the penalty from the line 4. If you do not have your 2010 income amount you would otherwise enter on line tax return, call the IRS at 1-800-908-9946 74a or line 75. Lines 74a, 75, and 77 must to get a free transcript of your return or visitSign Your Return equal line 73. IRS.gov and click on “Order a Tax ReturnForm 1040 is not considered a valid return or Account Transcript.” (If you filed elec-If the penalty is more than the overpay- unless you sign it. If you are filing a joint tronically last year, you may use your priorment on line 73, enter -0- on lines 74a and return, your spouse must also sign. If your year PIN to verify your identity instead of75. Then subtract line 73 from line 77 and spouse cannot sign the return, see Pub. 501. your prior year AGI. The prior year PIN isenter the result on line 76. Be sure to date your return and enter your the five digit PIN you used to electronicallyoccupation(s). If you have someone pre- Do not file Form 2210 with your return sign your 2010 return.) You will also bepare your return, you are still responsibleunless Form 2210 indicates that you must prompted to enter your date of birth (DOB).for the correctness of the return. If yourdo so. Instead, keep it for your records.

return is signed by a representative for you, You cannot use the Self-SelectBecause Form 2210 is compli- you must have a power of attorney attached PIN method if you are acated, you can leave line 77 that specifically authorizes the representa- first-time filer under age 16 atblank and the IRS will figure tive to sign your return. To do this, you can CAUTION !

the end of 2011. TIP

the penalty and send you a bill. use Form 2848. If you are filing a joint We will not charge you interest on the pen- return as a surviving spouse, see Death of a If you cannot locate your prioralty if you pay by the date specified on the Taxpayer, later. year AGI or prior year PIN, usebill. If your income varied during the year, the Electronic Filing PIN Re-the annualized income installment method Child’s Return

TIP quest. This can be found atmay reduce the amount of your penalty.

IRS.gov. Click on “Tools” and then “Elec-If your child cannot sign the return, eitherBut you must file Form 2210 because the tronic Filing PIN Request.” Or you can callparent can sign the child’s name in theIRS cannot figure your penalty under this 1-866-704-7388.space provided. Then, enter “By (your sig-method. See the Instructions for Form 2210

nature), parent for minor child.”for other situations in which you may be Practitioner PIN. The Practitioner PINable to lower your penalty by filing Form method allows you to authorize your tax2210. Daytime Phone Number practitioner to enter or generate your PIN. Providing your daytime phone number may The practitioner can provide you with de- help speed the processing of your return. tails. We may have questions about items onThird Party Designee your return, such as the earned income Form 8453. You must send in a paper

If you want to allow your preparer, a friend, credit, credit for child and dependent care Form 8453 if you have to attach certain a family member, or any other person you expenses, etc. If you answer our questions forms or other documents that cannot be choose to discuss your 2011 tax return with over the phone, we may be able to continue electronically filed. For details, see Form the IRS, check the “Yes” box in the “Third processing your return without mailing you 8453.

Need more information or forms? Visit IRS.gov. - 72 -

quence No.” shown in the upper right cor-Preparer Tax Identification Number ner of the schedule or form. If you have(PTIN) in the space provided. The preparerIdentity Protection supporting statements, arrange them in themust give you a copy of the return for your same order as the schedules or forms theyrecords. Someone who prepares your returnPIN support and attach them last. Do not attachbut does not charge you should not signIf the IRS gave you an identity protection correspondence or other items unless re-your return.personal identification number (PIN) be- quired to do so. Attach a copy of Forms

cause you were a victim of identity theft, W-2 and 2439 to the front of Form 1040. If enter it in the spaces provided below your you received a Form W-2c (a corrected daytime phone number. If the IRS has not Form W-2), attach a copy of your original given you this type of number, leave these Assemble Your Return Forms W-2 and any Forms W-2c. Also at- spaces blank. tach Forms W-2G and 1099-R to the frontAssemble any schedules and forms behind

of Form 1040 if tax was withheld.Form 1040 in order of the “Attachment Se-

Paid Preparer Must Sign Your Return Generally, anyone you pay to prepare your return must sign it and include their

- 73 - Need more information or forms? Visit IRS.gov.

��������� ��� ���� �������� ����������������� �� �� �������� �� ��������!������� ����� ��� �2011 CAUTION!

Example.Tax Table At Least

But Less Than

Single Married filing jointly *

Married filing sepa- rately

Head of a house- hold

Your tax is— 25,200 25,250 25,300 25,350

3,359 3,366 3,374 3,381

Sample Table

25,250 25,300 25,350 25,400

2,934 2,941 2,949 2,956

3,359 3,366 3,374 3,381

3,176 3,184 3,191 3,199

If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

1,300 1,3250 5 2,700 2,725 1,325 1,3505 15 2,725 2,750 1,350 1,37515 25 2,750 2,775 1,375 1,40025 50 2,775 2,800

50 75 1,400 1,425 2,800 2,82575 100 1,425 1,450 2,825 2,850 1,450 1,475100 125 2,850 2,875 1,475 1,500125 150 2,875 2,900

150 175 1,500 1,525 2,900 2,925175 200 1,525 1,550 2,925 2,9501,550 1,575200 225 2,950 2,9751,575 1,600225 250 2,975 3,000 1,600 1,625250 275 1,625 1,650275 300 3,000 1,650 1,675300 325 1,675 1,700 3,000 3,050325 350 3,050 3,1001,700 1,725350 375 3,100 3,1501,725 1,750375 400 3,150 3,2001,750 1,775400 425 1,775 1,800 3,200 3,250425 450 3,250 3,3001,800 1,825450 475 3,300 3,3501,825 1,850475 500 3,350 3,4001,850 1,875

500 525 1,875 1,900 3,400 3,450525 550 1,900 1,925 3,450 3,500550 575 1,925 1,950 3,500 3,550575 600 1,950 1,975 3,550 3,600 600 625 1,975 2,000 3,600 3,650625 650 3,650 3,700650 675 2,000 3,700 3,750675 700 3,750 3,8002,000 2,025700 725 3,800 3,8502,025 2,050725 750 3,850 3,9002,050 2,075750 775 3,900 3,9502,075 2,100775 800 3,950 4,0002,100 2,125800 825

2,125 2,150825 850 4,0002,150 2,175850 875 2,175 2,200875 900 4,000 4,050 2,200 2,225 4,050 4,100900 925 2,225 2,250 4,100 4,150925 950 2,250 2,275 4,150 4,200950 975 2,275 2,300975 1,000 4,200 4,250 2,300 2,325 4,250 4,300 2,325 2,350 4,300 4,3501,000 2,350 2,375 4,350 4,400

1,000 1,025 2,375 2,400 4,400 4,4501,025 1,050 2,400 2,425 4,450 4,5001,050 1,075 2,425 2,450 4,500 4,5501,075 1,100 2,450 2,475 4,550 4,600 1,100 1,125 2,475 2,500 4,600 4,6501,125 1,150 2,500 2,525 4,650 4,7001,150 1,175 2,525 2,550 4,700 4,7501,175 1,200 2,550 2,575 4,750 4,800 1,200 1,225 2,575 2,600 4,800 4,8501,225 1,250 2,600 2,625 4,850 4,9001,250 1,275 2,625 2,650 4,900 4,9501,275 1,300 2,650 2,675 4,950 5,000

2,675 2,700

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- 74 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

5,000 8,000 11,000 5,000 5,050 8,000 8,050 11,000 11,050 5,050 5,100 8,050 8,100 11,050 11,100 5,100 5,150 8,100 8,150 11,100 11,150 5,150 5,200 8,150 8,200 11,150 11,200 5,200 5,250 8,200 8,250 11,200 11,250 5,250 5,300 8,250 8,300 11,250 11,300 5,300 5,350 8,300 8,350 11,300 11,350 5,350 5,400 8,350 8,400 11,350 11,400 5,400 5,450 8,400 8,450 11,400 11,450 5,450 5,500 8,450 8,500 11,450 11,500 5,500 5,550 8,500 8,550 11,500 11,550 5,550 5,600 8,550 8,600 11,550 11,600 5,600 5,650 8,600 8,650 11,600 11,650 5,650 5,700 8,650 8,700 11,650 11,700 5,700 5,750 8,700 8,750 11,700 11,750 5,750 5,800 8,750 8,800 11,750 11,800 5,800 5,850 8,800 8,850 11,800 11,850 5,850 5,900 8,850 8,900 11,850 11,900 5,900 5,950 8,900 8,950 11,900 11,950 5,950 6,000 8,950 9,000 11,950 12,000

6,000 9,000 12,000 6,000 6,050 9,000 9,050 12,000 12,050 6,050 6,100 9,050 9,100 12,050 12,100 6,100 6,150 9,100 9,150 12,100 12,150 6,150 6,200 9,150 9,200 12,150 12,200 6,200 6,250 9,200 9,250 12,200 12,250 6,250 6,300 9,250 9,300 12,250 12,300 6,300 6,350 9,300 9,350 12,300 12,350 6,350 6,400 9,350 9,400 12,350 12,400 6,400 6,450 9,400 9,450 12,400 12,450 6,450 6,500 9,450 9,500 12,450 12,500 6,500 6,550 9,500 9,550 12,500 12,550 6,550 6,600 9,550 9,600 12,550 12,600 6,600 6,650 9,600 9,650 12,600 12,650 6,650 6,700 9,650 9,700 12,650 12,700 6,700 6,750 9,700 9,750 12,700 12,750 6,750 6,800 9,750 9,800 12,750 12,800 6,800 6,850 9,800 9,850 12,800 12,850 6,850 6,900 9,850 9,900 12,850 12,900 6,900 6,950 9,900 9,950 12,900 12,950 6,950 7,000 9,950 10,000 12,950 13,000

7,000 10,000 13,000 7,000 7,050 10,000 10,050 13,000 13,050 7,050 7,100 10,050 10,100 13,050 13,100 7,100 7,150 10,100 10,150 13,100 13,150 7,150 7,200 10,150 10,200 13,150 13,200 7,200 7,250 10,200 10,250 13,200 13,250 7,250 7,300 10,250 10,300 13,250 13,300 7,300 7,350 10,300 10,350 13,300 13,350 7,350 7,400 10,350 10,400 13,350 13,400 7,400 7,450 10,400 10,450 13,400 13,450 7,450 7,500 10,450 10,500 13,450 13,500 7,500 7,550 10,500 10,550 13,500 13,550 7,550 7,600 10,550 10,600 13,550 13,600 7,600 7,650 10,600 10,650 13,600 13,650 7,650 7,700 10,650 10,700 13,650 13,700 7,700 7,750 10,700 10,750 13,700 13,750 7,750 7,800 10,750 10,800 13,750 13,800 7,800 7,850 10,800 10,850 13,800 13,850 7,850 7,900 10,850 10,900 13,850 13,900 7,900 7,950 10,900 10,950 13,900 13,950 7,950 8,000 10,950 11,000 13,950 14,000

��� �� ���

- 75 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

14,000 17,000 20,000 14,000 14,050 17,000 17,050 20,000 20,050 14,050 14,100 17,050 17,100 20,050 20,100 14,100 14,150 17,100 17,150 20,100 20,150 14,150 14,200 17,150 17,200 20,150 20,200 14,200 14,250 17,200 17,250 20,200 20,250 14,250 14,300 17,250 17,300 20,250 20,300 14,300 14,350 17,300 17,350 20,300 20,350 14,350 14,400 17,350 17,400 20,350 20,400 14,400 14,450 17,400 17,450 20,400 20,450 14,450 14,500 17,450 17,500 20,450 20,500 14,500 14,550 17,500 17,550 20,500 20,550 14,550 14,600 17,550 17,600 20,550 20,600 14,600 14,650 17,600 17,650 20,600 20,650 14,650 14,700 17,650 17,700 20,650 20,700 14,700 14,750 17,700 17,750 20,700 20,750 14,750 14,800 17,750 17,800 20,750 20,800 14,800 14,850 17,800 17,850 20,800 20,850 14,850 14,900 17,850 17,900 20,850 20,900 14,900 14,950 17,900 17,950 20,900 20,950 14,950 15,000 17,950 18,000 20,950 21,000

15,000 18,000 21,000 15,000 15,050 18,000 18,050 21,000 21,050 15,050 15,100 18,050 18,100 21,050 21,100 15,100 15,150 18,100 18,150 21,100 21,150 15,150 15,200 18,150 18,200 21,150 21,200 15,200 15,250 18,200 18,250 21,200 21,250 15,250 15,300 18,250 18,300 21,250 21,300 15,300 15,350 18,300 18,350 21,300 21,350 15,350 15,400 18,350 18,400 21,350 21,400 15,400 15,450 18,400 18,450 21,400 21,450 15,450 15,500 18,450 18,500 21,450 21,500 15,500 15,550 18,500 18,550 21,500 21,550 15,550 15,600 18,550 18,600 21,550 21,600 15,600 15,650 18,600 18,650 21,600 21,650 15,650 15,700 18,650 18,700 21,650 21,700 15,700 15,750 18,700 18,750 21,700 21,750 15,750 15,800 18,750 18,800 21,750 21,800 15,800 15,850 18,800 18,850 21,800 21,850 15,850 15,900 18,850 18,900 21,850 21,900 15,900 15,950 18,900 18,950 21,900 21,950 15,950 16,000 18,950 19,000 21,950 22,000

16,000 19,000 22,000 16,000 16,050 19,000 19,050 22,000 22,050 16,050 16,100 19,050 19,100 22,050 22,100 16,100 16,150 19,100 19,150 22,100 22,150 16,150 16,200 19,150 19,200 22,150 22,200 16,200 16,250 19,200 19,250 22,200 22,250 16,250 16,300 19,250 19,300 22,250 22,300 16,300 16,350 19,300 19,350 22,300 22,350 16,350 16,400 19,350 19,400 22,350 22,400 16,400 16,450 19,400 19,450 22,400 22,450 16,450 16,500 19,450 19,500 22,450 22,500 16,500 16,550 19,500 19,550 22,500 22,550 16,550 16,600 19,550 19,600 22,550 22,600 16,600 16,650 19,600 19,650 22,600 22,650 16,650 16,700 19,650 19,700 22,650 22,700 16,700 16,750 19,700 19,750 22,700 22,750 16,750 16,800 19,750 19,800 22,750 22,800 16,800 16,850 19,800 19,850 22,800 22,850 16,850 16,900 19,850 19,900 22,850 22,900 16,900 16,950 19,900 19,950 22,900 22,950 16,950 17,000 19,950 20,000 22,950 23,000

��� �� ���

- 76 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

23,000 26,000 29,000 23,000 23,050 26,000 26,050 29,000 29,050 23,050 23,100 26,050 26,100 29,050 29,100 23,100 23,150 26,100 26,150 29,100 29,150 23,150 23,200 26,150 26,200 29,150 29,200 23,200 23,250 26,200 26,250 29,200 29,250 23,250 23,300 26,250 26,300 29,250 29,300 23,300 23,350 26,300 26,350 29,300 29,350 23,350 23,400 26,350 26,400 29,350 29,400 23,400 23,450 26,400 26,450 29,400 29,450 23,450 23,500 26,450 26,500 29,450 29,500 23,500 23,550 26,500 26,550 29,500 29,550 23,550 23,600 26,550 26,600 29,550 29,600 23,600 23,650 26,600 26,650 29,600 29,650 23,650 23,700 26,650 26,700 29,650 29,700 23,700 23,750 26,700 26,750 29,700 29,750 23,750 23,800 26,750 26,800 29,750 29,800 23,800 23,850 26,800 26,850 29,800 29,850 23,850 23,900 26,850 26,900 29,850 29,900 23,900 23,950 26,900 26,950 29,900 29,950 23,950 24,000 26,950 27,000 29,950 30,000

24,000 27,000 30,000 24,000 24,050 27,000 27,050 30,000 30,050 24,050 24,100 27,050 27,100 30,050 30,100 24,100 24,150 27,100 27,150 30,100 30,150 24,150 24,200 27,150 27,200 30,150 30,200 24,200 24,250 27,200 27,250 30,200 30,250 24,250 24,300 27,250 27,300 30,250 30,300 24,300 24,350 27,300 27,350 30,300 30,350 24,350 24,400 27,350 27,400 30,350 30,400 24,400 24,450 27,400 27,450 30,400 30,450 24,450 24,500 27,450 27,500 30,450 30,500 24,500 24,550 27,500 27,550 30,500 30,550 24,550 24,600 27,550 27,600 30,550 30,600 24,600 24,650 27,600 27,650 30,600 30,650 24,650 24,700 27,650 27,700 30,650 30,700 24,700 24,750 27,700 27,750 30,700 30,750 24,750 24,800 27,750 27,800 30,750 30,800 24,800 24,850 27,800 27,850 30,800 30,850 24,850 24,900 27,850 27,900 30,850 30,900 24,900 24,950 27,900 27,950 30,900 30,950 24,950 25,000 27,950 28,000 30,950 31,000

25,000 28,000 31,000 25,000 25,050 28,000 28,050 31,000 31,050 25,050 25,100 28,050 28,100 31,050 31,100 25,100 25,150 28,100 28,150 31,100 31,150 25,150 25,200 28,150 28,200 31,150 31,200 25,200 25,250 28,200 28,250 31,200 31,250 25,250 25,300 28,250 28,300 31,250 31,300 25,300 25,350 28,300 28,350 31,300 31,350 25,350 25,400 28,350 28,400 31,350 31,400 25,400 25,450 28,400 28,450 31,400 31,450 25,450 25,500 28,450 28,500 31,450 31,500 25,500 25,550 28,500 28,550 31,500 31,550 25,550 25,600 28,550 28,600 31,550 31,600 25,600 25,650 28,600 28,650 31,600 31,650 25,650 25,700 28,650 28,700 31,650 31,700 25,700 25,750 28,700 28,750 31,700 31,750 25,750 25,800 28,750 28,800 31,750 31,800 25,800 25,850 28,800 28,850 31,800 31,850 25,850 25,900 28,850 28,900 31,850 31,900 25,900 25,950 28,900 28,950 31,900 31,950 25,950 26,000 28,950 29,000 31,950 32,000

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- 77 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

32,000 35,000 38,000 32,000 32,050 35,000 35,050 38,000 38,050 32,050 32,100 35,050 35,100 38,050 38,100 32,100 32,150 35,100 35,150 38,100 38,150 32,150 32,200 35,150 35,200 38,150 38,200 32,200 32,250 35,200 35,250 38,200 38,250 32,250 32,300 35,250 35,300 38,250 38,300 32,300 32,350 35,300 35,350 38,300 38,350 32,350 32,400 35,350 35,400 38,350 38,400 32,400 32,450 35,400 35,450 38,400 38,450 32,450 32,500 35,450 35,500 38,450 38,500 32,500 32,550 35,500 35,550 38,500 38,550 32,550 32,600 35,550 35,600 38,550 38,600 32,600 32,650 35,600 35,650 38,600 38,650 32,650 32,700 35,650 35,700 38,650 38,700 32,700 32,750 35,700 35,750 38,700 38,750 32,750 32,800 35,750 35,800 38,750 38,800 32,800 32,850 35,800 35,850 38,800 38,850 32,850 32,900 35,850 35,900 38,850 38,900 32,900 32,950 35,900 35,950 38,900 38,950 32,950 33,000 35,950 36,000 38,950 39,000

33,000 36,000 39,000 33,000 33,050 36,000 36,050 39,000 39,050 33,050 33,100 36,050 36,100 39,050 39,100 33,100 33,150 36,100 36,150 39,100 39,150 33,150 33,200 36,150 36,200 39,150 39,200 33,200 33,250 36,200 36,250 39,200 39,250 33,250 33,300 36,250 36,300 39,250 39,300 33,300 33,350 36,300 36,350 39,300 39,350 33,350 33,400 36,350 36,400 39,350 39,400 33,400 33,450 36,400 36,450 39,400 39,450 33,450 33,500 36,450 36,500 39,450 39,500 33,500 33,550 36,500 36,550 39,500 39,550 33,550 33,600 36,550 36,600 39,550 39,600 33,600 33,650 36,600 36,650 39,600 39,650 33,650 33,700 36,650 36,700 39,650 39,700 33,700 33,750 36,700 36,750 39,700 39,750 33,750 33,800 36,750 36,800 39,750 39,800 33,800 33,850 36,800 36,850 39,800 39,850 33,850 33,900 36,850 36,900 39,850 39,900 33,900 33,950 36,900 36,950 39,900 39,950 33,950 34,000 36,950 37,000 39,950 40,000

34,000 37,000 40,000 34,000 34,050 37,000 37,050 40,000 40,050 34,050 34,100 37,050 37,100 40,050 40,100 34,100 34,150 37,100 37,150 40,100 40,150 34,150 34,200 37,150 37,200 40,150 40,200 34,200 34,250 37,200 37,250 40,200 40,250 34,250 34,300 37,250 37,300 40,250 40,300 34,300 34,350 37,300 37,350 40,300 40,350 34,350 34,400 37,350 37,400 40,350 40,400 34,400 34,450 37,400 37,450 40,400 40,450 34,450 34,500 37,450 37,500 40,450 40,500 34,500 34,550 37,500 37,550 40,500 40,550 34,550 34,600 37,550 37,600 40,550 40,600 34,600 34,650 37,600 37,650 40,600 40,650 34,650 34,700 37,650 37,700 40,650 40,700 34,700 34,750 37,700 37,750 40,700 40,750 34,750 34,800 37,750 37,800 40,750 40,800 34,800 34,850 37,800 37,850 40,800 40,850 34,850 34,900 37,850 37,900 40,850 40,900 34,900 34,950 37,900 37,950 40,900 40,950 34,950 35,000 37,950 38,000 40,950 41,000

��� �� ���

- 78 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

41,000 44,000 47,000 41,000 41,050 44,000 44,050 47,000 47,050 41,050 41,100 44,050 44,100 47,050 47,100 41,100 41,150 44,100 44,150 47,100 47,150 41,150 41,200 44,150 44,200 47,150 47,200 41,200 41,250 44,200 44,250 47,200 47,250 41,250 41,300 44,250 44,300 47,250 47,300 41,300 41,350 44,300 44,350 47,300 47,350 41,350 41,400 44,350 44,400 47,350 47,400 41,400 41,450 44,400 44,450 47,400 47,450 41,450 41,500 44,450 44,500 47,450 47,500 41,500 41,550 44,500 44,550 47,500 47,550 41,550 41,600 44,550 44,600 47,550 47,600 41,600 41,650 44,600 44,650 47,600 47,650 41,650 41,700 44,650 44,700 47,650 47,700 41,700 41,750 44,700 44,750 47,700 47,750 41,750 41,800 44,750 44,800 47,750 47,800 41,800 41,850 44,800 44,850 47,800 47,850 41,850 41,900 44,850 44,900 47,850 47,900 41,900 41,950 44,900 44,950 47,900 47,950 41,950 42,000 44,950 45,000 47,950 48,000

42,000 45,000 48,000 42,000 42,050 45,000 45,050 48,000 48,050 42,050 42,100 45,050 45,100 48,050 48,100 42,100 42,150 45,100 45,150 48,100 48,150 42,150 42,200 45,150 45,200 48,150 48,200 42,200 42,250 45,200 45,250 48,200 48,250 42,250 42,300 45,250 45,300 48,250 48,300 42,300 42,350 45,300 45,350 48,300 48,350 42,350 42,400 45,350 45,400 48,350 48,400 42,400 42,450 45,400 45,450 48,400 48,450 42,450 42,500 45,450 45,500 48,450 48,500 42,500 42,550 45,500 45,550 48,500 48,550 42,550 42,600 45,550 45,600 48,550 48,600 42,600 42,650 45,600 45,650 48,600 48,650 42,650 42,700 45,650 45,700 48,650 48,700 42,700 42,750 45,700 45,750 48,700 48,750 42,750 42,800 45,750 45,800 48,750 48,800 42,800 42,850 45,800 45,850 48,800 48,850 42,850 42,900 45,850 45,900 48,850 48,900 42,900 42,950 45,900 45,950 48,900 48,950 42,950 43,000 45,950 46,000 48,950 49,000

43,000 46,000 49,000 43,000 43,050 46,000 46,050 49,000 49,050 43,050 43,100 46,050 46,100 49,050 49,100 43,100 43,150 46,100 46,150 49,100 49,150 43,150 43,200 46,150 46,200 49,150 49,200 43,200 43,250 46,200 46,250 49,200 49,250 43,250 43,300 46,250 46,300 49,250 49,300 43,300 43,350 46,300 46,350 49,300 49,350 43,350 43,400 46,350 46,400 49,350 49,400 43,400 43,450 46,400 46,450 49,400 49,450 43,450 43,500 46,450 46,500 49,450 49,500 43,500 43,550 46,500 46,550 49,500 49,550 43,550 43,600 46,550 46,600 49,550 49,600 43,600 43,650 46,600 46,650 49,600 49,650 43,650 43,700 46,650 46,700 49,650 49,700 43,700 43,750 46,700 46,750 49,700 49,750 43,750 43,800 46,750 46,800 49,750 49,800 43,800 43,850 46,800 46,850 49,800 49,850 43,850 43,900 46,850 46,900 49,850 49,900 43,900 43,950 46,900 46,950 49,900 49,950 43,950 44,000 46,950 47,000 49,950 50,000

��� �� ���

- 79 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

50,000 53,000 56,000 50,000 50,050 53,000 53,050 56,000 56,050 50,050 50,100 53,050 53,100 56,050 56,100 50,100 50,150 53,100 53,150 56,100 56,150 50,150 50,200 53,150 53,200 56,150 56,200 50,200 50,250 53,200 53,250 56,200 56,250 50,250 50,300 53,250 53,300 56,250 56,300 50,300 50,350 53,300 53,350 56,300 56,350 50,350 50,400 53,350 53,400 56,350 56,400 50,400 50,450 53,400 53,450 56,400 56,450 50,450 50,500 53,450 53,500 56,450 56,500 50,500 50,550 53,500 53,550 56,500 56,550 50,550 50,600 53,550 53,600 56,550 56,600 50,600 50,650 53,600 53,650 56,600 56,650 50,650 50,700 53,650 53,700 56,650 56,700 50,700 50,750 53,700 53,750 56,700 56,750 50,750 50,800 53,750 53,800 56,750 56,800 50,800 50,850 53,800 53,850 56,800 56,850 50,850 50,900 53,850 53,900 56,850 56,900 50,900 50,950 53,900 53,950 56,900 56,950 50,950 51,000 53,950 54,000 56,950 57,000

51,000 54,000 57,000 51,000 51,050 54,000 54,050 57,000 57,050 51,050 51,100 54,050 54,100 57,050 57,100 51,100 51,150 54,100 54,150 57,100 57,150 51,150 51,200 54,150 54,200 57,150 57,200 51,200 51,250 54,200 54,250 57,200 57,250 51,250 51,300 54,250 54,300 57,250 57,300 51,300 51,350 54,300 54,350 57,300 57,350 51,350 51,400 54,350 54,400 57,350 57,400 51,400 51,450 54,400 54,450 57,400 57,450 51,450 51,500 54,450 54,500 57,450 57,500 51,500 51,550 54,500 54,550 57,500 57,550 51,550 51,600 54,550 54,600 57,550 57,600 51,600 51,650 54,600 54,650 57,600 57,650 51,650 51,700 54,650 54,700 57,650 57,700 51,700 51,750 54,700 54,750 57,700 57,750 51,750 51,800 54,750 54,800 57,750 57,800 51,800 51,850 54,800 54,850 57,800 57,850 51,850 51,900 54,850 54,900 57,850 57,900 51,900 51,950 54,900 54,950 57,900 57,950 51,950 52,000 54,950 55,000 57,950 58,000

52,000 55,000 58,000 52,000 52,050 55,000 55,050 58,000 58,050 52,050 52,100 55,050 55,100 58,050 58,100 52,100 52,150 55,100 55,150 58,100 58,150 52,150 52,200 55,150 55,200 58,150 58,200 52,200 52,250 55,200 55,250 58,200 58,250 52,250 52,300 55,250 55,300 58,250 58,300 52,300 52,350 55,300 55,350 58,300 58,350 52,350 52,400 55,350 55,400 58,350 58,400 52,400 52,450 55,400 55,450 58,400 58,450 52,450 52,500 55,450 55,500 58,450 58,500 52,500 52,550 55,500 55,550 58,500 58,550 52,550 52,600 55,550 55,600 58,550 58,600 52,600 52,650 55,600 55,650 58,600 58,650 52,650 52,700 55,650 55,700 58,650 58,700 52,700 52,750 55,700 55,750 58,700 58,750 52,750 52,800 55,750 55,800 58,750 58,800 52,800 52,850 55,800 55,850 58,800 58,850 52,850 52,900 55,850 55,900 58,850 58,900 52,900 52,950 55,900 55,950 58,900 58,950 52,950 53,000 55,950 56,000 58,950 59,000

��� �� ���

- 80 -

2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

59,000 62,000 65,000 59,000 59,050 62,000 62,050 65,000 65,050 59,050 59,100 62,050 62,100 65,050 65,100 59,100 59,150 62,100 62,150 65,100 65,150 59,150 59,200 62,150 62,200 65,150 65,200 59,200 59,250 62,200 62,250 65,200 65,250 59,250 59,300 62,250 62,300 65,250 65,300 59,300 59,350 62,300 62,350 65,300 65,350 59,350 59,400 62,350 62,400 65,350 65,400 59,400 59,450 62,400 62,450 65,400 65,450 59,450 59,500 62,450 62,500 65,450 65,500 59,500 59,550 62,500 62,550 65,500 65,550 59,550 59,600 62,550 62,600 65,550 65,600 59,600 59,650 62,600 62,650 65,600 65,650 59,650 59,700 62,650 62,700 65,650 65,700 59,700 59,750 62,700 62,750 65,700 65,750 59,750 59,800 62,750 62,800 65,750 65,800 59,800 59,850 62,800 62,850 65,800 65,850 59,850 59,900 62,850 62,900 65,850 65,900 59,900 59,950 62,900 62,950 65,900 65,950 59,950 60,000 62,950 63,000 65,950 66,000

60,000 63,000 66,000 60,000 60,050 63,000 63,050 66,000 66,050 60,050 60,100 63,050 63,100 66,050 66,100 60,100 60,150 63,100 63,150 66,100 66,150 60,150 60,200 63,150 63,200 66,150 66,200 60,200 60,250 63,200 63,250 66,200 66,250 60,250 60,300 63,250 63,300 66,250 66,300 60,300 60,350 63,300 63,350 66,300 66,350 60,350 60,400 63,350 63,400 66,350 66,400 60,400 60,450 63,400 63,450 66,400 66,450 60,450 60,500 63,450 63,500 66,450 66,500 60,500 60,550 63,500 63,550 66,500 66,550 60,550 60,600 63,550 63,600 66,550 66,600 60,600 60,650 63,600 63,650 66,600 66,650 60,650 60,700 63,650 63,700 66,650 66,700 60,700 60,750 63,700 63,750 66,700 66,750 60,750 60,800 63,750 63,800 66,750 66,800 60,800 60,850 63,800 63,850 66,800 66,850 60,850 60,900 63,850 63,900 66,850 66,900 60,900 60,950 63,900 63,950 66,900 66,950 60,950 61,000 63,950 64,000 66,950 67,000

61,000 64,000 67,000 61,000 61,050 64,000 64,050 67,000 67,050 61,050 61,100 64,050 64,100 67,050 67,100 61,100 61,150 64,100 64,150 67,100 67,150 61,150 61,200 64,150 64,200 67,150 67,200 61,200 61,250 64,200 64,250 67,200 67,250 61,250 61,300 64,250 64,300 67,250 67,300 61,300 61,350 64,300 64,350 67,300 67,350 61,350 61,400 64,350 64,400 67,350 67,400 61,400 61,450 64,400 64,450 67,400 67,450 61,450 61,500 64,450 64,500 67,450 67,500 61,500 61,550 64,500 64,550 67,500 67,550 61,550 61,600 64,550 64,600 67,550 67,600 61,600 61,650 64,600 64,650 67,600 67,650 61,650 61,700 64,650 64,700 67,650 67,700 61,700 61,750 64,700 64,750 67,700 67,750 61,750 61,800 64,750 64,800 67,750 67,800 61,800 61,850 64,800 64,850 67,800 67,850 61,850 61,900 64,850 64,900 67,850 67,900 61,900 61,950 64,900 64,950 67,900 67,950 61,950 62,000 64,950 65,000 67,950 68,000

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2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

68,000 71,000 74,000 68,000 68,050 71,000 71,050 74,000 74,050 68,050 68,100 71,050 71,100 74,050 74,100 68,100 68,150 71,100 71,150 74,100 74,150 68,150 68,200 71,150 71,200 74,150 74,200 68,200 68,250 71,200 71,250 74,200 74,250 68,250 68,300 71,250 71,300 74,250 74,300 68,300 68,350 71,300 71,350 74,300 74,350 68,350 68,400 71,350 71,400 74,350 74,400 68,400 68,450 71,400 71,450 74,400 74,450 68,450 68,500 71,450 71,500 74,450 74,500 68,500 68,550 71,500 71,550 74,500 74,550 68,550 68,600 71,550 71,600 74,550 74,600 68,600 68,650 71,600 71,650 74,600 74,650 68,650 68,700 71,650 71,700 74,650 74,700 68,700 68,750 71,700 71,750 74,700 74,750 68,750 68,800 71,750 71,800 74,750 74,800 68,800 68,850 71,800 71,850 74,800 74,850 68,850 68,900 71,850 71,900 74,850 74,900 68,900 68,950 71,900 71,950 74,900 74,950 68,950 69,000 71,950 72,000 74,950 75,000

69,000 72,000 75,000 69,000 69,050 72,000 72,050 75,000 75,050 69,050 69,100 72,050 72,100 75,050 75,100 69,100 69,150 72,100 72,150 75,100 75,150 69,150 69,200 72,150 72,200 75,150 75,200 69,200 69,250 72,200 72,250 75,200 75,250 69,250 69,300 72,250 72,300 75,250 75,300 69,300 69,350 72,300 72,350 75,300 75,350 69,350 69,400 72,350 72,400 75,350 75,400 69,400 69,450 72,400 72,450 75,400 75,450 69,450 69,500 72,450 72,500 75,450 75,500 69,500 69,550 72,500 72,550 75,500 75,550 69,550 69,600 72,550 72,600 75,550 75,600 69,600 69,650 72,600 72,650 75,600 75,650 69,650 69,700 72,650 72,700 75,650 75,700 69,700 69,750 72,700 72,750 75,700 75,750 69,750 69,800 72,750 72,800 75,750 75,800 69,800 69,850 72,800 72,850 75,800 75,850 69,850 69,900 72,850 72,900 75,850 75,900 69,900 69,950 72,900 72,950 75,900 75,950 69,950 70,000 72,950 73,000 75,950 76,000

70,000 73,000 76,000 70,000 70,050 73,000 73,050 76,000 76,050 70,050 70,100 73,050 73,100 76,050 76,100 70,100 70,150 73,100 73,150 76,100 76,150 70,150 70,200 73,150 73,200 76,150 76,200 70,200 70,250 73,200 73,250 76,200 76,250 70,250 70,300 73,250 73,300 76,250 76,300 70,300 70,350 73,300 73,350 76,300 76,350 70,350 70,400 73,350 73,400 76,350 76,400 70,400 70,450 73,400 73,450 76,400 76,450 70,450 70,500 73,450 73,500 76,450 76,500 70,500 70,550 73,500 73,550 76,500 76,550 70,550 70,600 73,550 73,600 76,550 76,600 70,600 70,650 73,600 73,650 76,600 76,650 70,650 70,700 73,650 73,700 76,650 76,700 70,700 70,750 73,700 73,750 76,700 76,750 70,750 70,800 73,750 73,800 76,750 76,800 70,800 70,850 73,800 73,850 76,800 76,850 70,850 70,900 73,850 73,900 76,850 76,900 70,900 70,950 73,900 73,950 76,900 76,950 70,950 71,000 73,950 74,000 76,950 77,000

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2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

77,000 80,000 83,000 77,000 77,050 80,000 80,050 83,000 83,050 77,050 77,100 80,050 80,100 83,050 83,100 77,100 77,150 80,100 80,150 83,100 83,150 77,150 77,200 80,150 80,200 83,150 83,200 77,200 77,250 80,200 80,250 83,200 83,250 77,250 77,300 80,250 80,300 83,250 83,300 77,300 77,350 80,300 80,350 83,300 83,350 77,350 77,400 80,350 80,400 83,350 83,400 77,400 77,450 80,400 80,450 83,400 83,450 77,450 77,500 80,450 80,500 83,450 83,500 77,500 77,550 80,500 80,550 83,500 83,550 77,550 77,600 80,550 80,600 83,550 83,600 77,600 77,650 80,600 80,650 83,600 83,650 77,650 77,700 80,650 80,700 83,650 83,700 77,700 77,750 80,700 80,750 83,700 83,750 77,750 77,800 80,750 80,800 83,750 83,800 77,800 77,850 80,800 80,850 83,800 83,850 77,850 77,900 80,850 80,900 83,850 83,900 77,900 77,950 80,900 80,950 83,900 83,950 77,950 78,000 80,950 81,000 83,950 84,000

78,000 81,000 84,000 78,000 78,050 81,000 81,050 84,000 84,050 78,050 78,100 81,050 81,100 84,050 84,100 78,100 78,150 81,100 81,150 84,100 84,150 78,150 78,200 81,150 81,200 84,150 84,200 78,200 78,250 81,200 81,250 84,200 84,250 78,250 78,300 81,250 81,300 84,250 84,300 78,300 78,350 81,300 81,350 84,300 84,350 78,350 78,400 81,350 81,400 84,350 84,400 78,400 78,450 81,400 81,450 84,400 84,450 78,450 78,500 81,450 81,500 84,450 84,500 78,500 78,550 81,500 81,550 84,500 84,550 78,550 78,600 81,550 81,600 84,550 84,600 78,600 78,650 81,600 81,650 84,600 84,650 78,650 78,700 81,650 81,700 84,650 84,700 78,700 78,750 81,700 81,750 84,700 84,750 78,750 78,800 81,750 81,800 84,750 84,800 78,800 78,850 81,800 81,850 84,800 84,850 78,850 78,900 81,850 81,900 84,850 84,900 78,900 78,950 81,900 81,950 84,900 84,950 78,950 79,000 81,950 82,000 84,950 85,000

79,000 82,000 85,000 79,000 79,050 82,000 82,050 85,000 85,050 79,050 79,100 82,050 82,100 85,050 85,100 79,100 79,150 82,100 82,150 85,100 85,150 79,150 79,200 82,150 82,200 85,150 85,200 79,200 79,250 82,200 82,250 85,200 85,250 79,250 79,300 82,250 82,300 85,250 85,300 79,300 79,350 82,300 82,350 85,300 85,350 79,350 79,400 82,350 82,400 85,350 85,400 79,400 79,450 82,400 82,450 85,400 85,450 79,450 79,500 82,450 82,500 85,450 85,500 79,500 79,550 82,500 82,550 85,500 85,550 79,550 79,600 82,550 82,600 85,550 85,600 79,600 79,650 82,600 82,650 85,600 85,650 79,650 79,700 82,650 82,700 85,650 85,700 79,700 79,750 82,700 82,750 85,700 85,750 79,750 79,800 82,750 82,800 85,750 85,800 79,800 79,850 82,800 82,850 85,800 85,850 79,850 79,900 82,850 82,900 85,850 85,900 79,900 79,950 82,900 82,950 85,900 85,950 79,950 80,000 82,950 83,000 85,950 86,000

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2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

86,000 89,000 92,000 86,000 86,050 89,000 89,050 92,000 92,050 86,050 86,100 89,050 89,100 92,050 92,100 86,100 86,150 89,100 89,150 92,100 92,150 86,150 86,200 89,150 89,200 92,150 92,200 86,200 86,250 89,200 89,250 92,200 92,250 86,250 86,300 89,250 89,300 92,250 92,300 86,300 86,350 89,300 89,350 92,300 92,350 86,350 86,400 89,350 89,400 92,350 92,400 86,400 86,450 89,400 89,450 92,400 92,450 86,450 86,500 89,450 89,500 92,450 92,500 86,500 86,550 89,500 89,550 92,500 92,550 86,550 86,600 89,550 89,600 92,550 92,600 86,600 86,650 89,600 89,650 92,600 92,650 86,650 86,700 89,650 89,700 92,650 92,700 86,700 86,750 89,700 89,750 92,700 92,750 86,750 86,800 89,750 89,800 92,750 92,800 86,800 86,850 89,800 89,850 92,800 92,850 86,850 86,900 89,850 89,900 92,850 92,900 86,900 86,950 89,900 89,950 92,900 92,950 86,950 87,000 89,950 90,000 92,950 93,000

87,000 90,000 93,000 87,000 87,050 90,000 90,050 93,000 93,050 87,050 87,100 90,050 90,100 93,050 93,100 87,100 87,150 90,100 90,150 93,100 93,150 87,150 87,200 90,150 90,200 93,150 93,200 87,200 87,250 90,200 90,250 93,200 93,250 87,250 87,300 90,250 90,300 93,250 93,300 87,300 87,350 90,300 90,350 93,300 93,350 87,350 87,400 90,350 90,400 93,350 93,400 87,400 87,450 90,400 90,450 93,400 93,450 87,450 87,500 90,450 90,500 93,450 93,500 87,500 87,550 90,500 90,550 93,500 93,550 87,550 87,600 90,550 90,600 93,550 93,600 87,600 87,650 90,600 90,650 93,600 93,650 87,650 87,700 90,650 90,700 93,650 93,700 87,700 87,750 90,700 90,750 93,700 93,750 87,750 87,800 90,750 90,800 93,750 93,800 87,800 87,850 90,800 90,850 93,800 93,850 87,850 87,900 90,850 90,900 93,850 93,900 87,900 87,950 90,900 90,950 93,900 93,950 87,950 88,000 90,950 91,000 93,950 94,000

88,000 91,000 94,000 88,000 88,050 91,000 91,050 94,000 94,050 88,050 88,100 91,050 91,100 94,050 94,100 88,100 88,150 91,100 91,150 94,100 94,150 88,150 88,200 91,150 91,200 94,150 94,200 88,200 88,250 91,200 91,250 94,200 94,250 88,250 88,300 91,250 91,300 94,250 94,300 88,300 88,350 91,300 91,350 94,300 94,350 88,350 88,400 91,350 91,400 94,350 94,400 88,400 88,450 91,400 91,450 94,400 94,450 88,450 88,500 91,450 91,500 94,450 94,500 88,500 88,550 91,500 91,550 94,500 94,550 88,550 88,600 91,550 91,600 94,550 94,600 88,600 88,650 91,600 91,650 94,600 94,650 88,650 88,700 91,650 91,700 94,650 94,700 88,700 88,750 91,700 91,750 94,700 94,750 88,750 88,800 91,750 91,800 94,750 94,800 88,800 88,850 91,800 91,850 94,800 94,850 88,850 88,900 91,850 91,900 94,850 94,900 88,900 88,950 91,900 91,950 94,900 94,950 88,950 89,000 91,950 92,000 94,950 95,000

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2011 Tax Table–�� �� �� If line 43 If line 43 If line 43 (taxable And you are — (taxable And you are — (taxable And you are — income) is — income) is — income) is —

Your tax is — Your tax is — Your tax is —

95,000 97,000 99,000 95,000 95,050 97,000 97,050 99,000 99,050 95,050 95,100 97,050 97,100 99,050 99,100 95,100 95,150 97,100 97,150 99,100 99,150 95,150 95,200 97,150 97,200 99,150 99,200 95,200 95,250 97,200 97,250 99,200 99,250 95,250 95,300 97,250 97,300 99,250 99,300 95,300 95,350 97,300 97,350 99,300 99,350 95,350 95,400 97,350 97,400 99,350 99,400 95,400 95,450 97,400 97,450 99,400 99,450 95,450 95,500 97,450 97,500 99,450 99,500 95,500 95,550 97,500 97,550 99,500 99,550 95,550 95,600 97,550 97,600 99,550 99,600 95,600 95,650 97,600 97,650 99,600 99,650 95,650 95,700 97,650 97,700 99,650 99,700 95,700 95,750 97,700 97,750 99,700 99,750 95,750 95,800 97,750 97,800 99,750 99,800 95,800 95,850 97,800 97,850 99,800 99,850 95,850 95,900 97,850 97,900 99,850 99,900 95,900 95,950 97,900 97,950 99,900 99,950 95,950 96,000 97,950 98,000 99,950 100,000

96,000 98,000 96,000 96,050 98,000 98,050 96,050 96,100 98,050 98,100 96,100 96,150 98,100 98,150 96,150 96,200 98,150 98,200 96,200 96,250 98,200 98,250 96,250 96,300 98,250 98,300 96,300 96,350 98,300 98,350 $100,00096,350 96,400 98,350 98,400 or over — 96,400 96,450 98,400 98,450 96,450 96,500 98,450 98,500 96,500 96,550 98,500 98,550 96,550 96,600 98,550 98,600 96,600 96,650 98,600 98,650 96,650 96,700 98,650 98,700 96,700 96,750 98,700 98,750 96,750 96,800 98,750 98,800 96,800 96,850 98,800 98,850 96,850 96,900 98,850 98,900 96,900 96,950 98,900 98,950 96,950 97,000 98,950 99,000

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CAUTION !

2011 Tax Computation Worksheet—Line 44 See the instructions for line 44 to see if you must use the worksheet below to figure your tax.

CAUTION !

Note. If you are required to use this worksheet to figure the tax on an amount from another form or worksheet, such as the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, Schedule J, Form 8615, or the Foreign Earned Income Tax Worksheet, enter the amount from that form or worksheet in column (a) of the row that applies to the amount you are looking up. Enter the result on the appropriate line of the form or worksheet that you are completing.

Section A—Use if your filing status is Single. Complete the row below that applies to you.

Tax. (a) (b) (c) (d) Subtract (d) from (c).

Taxable income. Enter the amount from line Multiplication Multiply Subtraction Enter the result here and If line 43 is— 43 amount (a) by (b) amount on Form 1040, line 44

At least $100,000 but not over $174,400 $ × 28% (.28) $ $ 6,383.00 $

Over $174,400 but not over $379,150 $ × 33% (.33) $ $ 15,103.00 $

Over $379,150 $ × 35% (.35) $ $22,686.00 $

Section B—Use if your filing status is Married filing jointly or Qualifying widow(er). Complete the row below that applies to you.

Tax. (a) (b) (c) (d) Subtract (d) from (c).

Taxable income. Enter the amount from line Multiplication Multiply Subtraction Enter the result here and If line 43 is— 43 amount (a) by (b) amount on Form 1040, line 44

At least $100,000 but not over $139,350 $ × 25% (.25) $ $ 7,750.00 $

Over $139,350 but not over $212,300 $ × 28% (.28) $ $ 11,930.50 $

Over $212,300 but not over $379,150 $ × 33% (.33) $ $ 22,545.50 $

Over $379,150 $ × 35% (.35) $ $ 30,128.50 $

Section C—Use if your filing status is Married filing separately. Complete the row below that applies to you.

Tax. (a) (b) (c) (d) Subtract (d) from (c).

Taxable income. Enter the amount from line Multiplication Multiply Subtraction Enter the result here and If line 43 is— 43 amount (a) by (b) amount on Form 1040, line 44

At least $100,000 but not over $106,150 $ × 28% (.28) $ $ 5,965.25 $

Over $106,150 but not over $189,575 $ × 33% (.33) $ $ 11,272.75 $

Over $189,575 $ × 35% (.35) $ $ 15,064.25 $

Section D—Use if your filing status is Head of household. Complete the row below that applies to you.

Tax. (a) (b) (c) (d) Subtract (d) from (c).

Taxable income. Enter the amount from line Multiplication Multiply Subtraction Enter the result here and If line 43 is— 43 amount (a) by (b) amount on Form 1040, line 44

At least $100,000 but not over $119,400 $ × 25% (.25) $ $ 5,232.50 $

Over $119,400 but not over $193,350 $ × 28% (.28) $ $ 8,814.50 $

Over $193,350 but not over $379,150 $ × 33% (.33) $ $ 18,482.00 $

Over $379,150 $ × 35% (.35) $ $ 26,065.00 $

Need more information or forms? Visit IRS.gov. - 86 -

General Information one original return for the same year, or have tax withheld from those payments by

How To Avoid Common sending in more than one copy of the same giving the payer Form W-4V. return (unless we ask you to do so), couldMistakes You can use the IRS Withhold-delay your refund.

ing Calculator at www.irs.gov/Mistakes can delay your refund or result in individuals, instead of Pub. 505notices being sent to you.

TIP or the worksheets included with• Make sure you entered the correct What Are Your Rights Form W-4 or W-4P, to determine whethername and social security number (SSN) for

you need to have your withholding in-each dependent you claim on line 6c. as a Taxpayer? creased or decreased.Check that each dependent’s name and

You have the right to be treated fairly, pro-SSN agrees with his or her social security In general, you do not have to makefessionally, promptly, and courteously bycard. For each child under age 17 who is a estimated tax payments if you expect thatIRS employees. Our goal at the IRS is toqualifying child for the child tax credit, your 2012 Form 1040 will show a tax re-protect your rights so that you will have themake sure you checked the box in line 6c, fund or a tax balance due of less thanhighest confidence in the integrity, effi-column (4). $1,000. If your total estimated tax for 2012ciency, and fairness of our tax system. To is $1,000 or more, see Form 1040-ES. It• Check your math, especially for the ensure that you always receive such treat- has a worksheet you can use to see if youchild tax credit, earned income credit ment, you should know about the many have to make estimated tax payments. For(EIC), taxable social security benefits, total rights you have at each step of the tax pro- more details, see Pub. 505.income, itemized deductions or standard cess. For details, see Pub. 1. deduction, deduction for exemptions, tax- able income, total tax, federal income tax withheld, and refund or amount you owe. Secure Your TaxInnocent Spouse Relief• Be sure you used the correct method

Records from Identityto figure your tax. See the instructions for Generally, both you and your spouse are line 44. each responsible for paying the full amount Theft• Be sure to enter your SSN in the space of tax, interest, and penalties on your joint Identity theft occurs when someone usesprovided on page 1 of Form 1040. If you return. However, you may qualify for relief your personal information, such as yourare married filing a joint or separate return, from liability for tax on a joint return if (a) name, social security number (SSN), oralso enter your spouse’s SSN. Be sure to there is an understatement of tax because other identifying information, without yourenter your SSN in the space next to your your spouse omitted income or claimed permission, to commit fraud or othername. Check that your name and SSN false deductions or credits, (b) you are di- crimes. An identity thief may use your SSNagree with your social security card. vorced, separated, or no longer living with to get a job or may file a tax return usingyour spouse, or (c) given all the facts and• Make sure your name and address are your SSN to receive a refund.circumstances, it would not be fair to holdcorrect. Enter your (and your spouse’s)

you liable for the tax. You may also qualifyname in the same order as shown on your To reduce your risk: for relief if you were a married resident of alast return. • Protect your SSN, community property state but did not file a• If you live in an apartment, be sure to • Ensure your employer is protectingjoint return and are now liable for an un-include your apartment number in your ad- your SSN, andderpaid or understated tax. File Form 8857dress. • Be careful when choosing a taxto request relief. In some cases, Form 8857• If you are taking the standard deduc- preparer.may need to be filed within 2 years of the

tion, see the instructions for line 40 to be date on which the IRS first attempted to If your tax records are affected by iden-sure you entered the correct amount. collect the tax from you. Do not file Form tity theft and you receive a notice from the• If you received capital gain distribu- 8857 with your Form 1040. For more infor- IRS, respond right away to the name andtions but were not required to file Schedule mation, see Pub. 971 and Form 8857 or you phone number printed on the IRS notice orD, make sure you checked the box on line can call the Innocent Spouse office toll-free letter.13. at 1-866-897-4270. If your tax records are not currently af-• If you are taking the EIC, be sure you

fected by identity theft but you think youused the correct column of the EIC Table are at risk due to a lost or stolen purse orfor your filing status and the number of Income Tax wallet, questionable credit card activity orchildren you have. credit report, etc., contact the IRS IdentityWithholding and• Remember to sign and date Form P r o t e c t i o n S p e c i a l i z e d U n i t a t1040 and enter your occupation(s). Estimated Tax 1-800-908-4490 or submit Form 14039.• Attach your Form(s) W-2 and other

Payments for 2012 For more information, see Pub. 4535.required forms and schedules. Put all forms and schedules in the proper order. See As- If the amount you owe or the amount you Victims of identity theft who are exper-semble Your Return, earlier. overpaid is large, you may want to file a iencing economic harm or a systemic prob-

• If you owe tax and are paying by new Form W-4 with your employer to lem, or are seeking help in resolving tax check or money order, be sure to include all change the amount of income tax withheld problems that have not been resolved the required information on your payment. from your 2012 pay. For details on how to through normal channels, may be eligible See the instructions for line 76 for details. complete Form W-4, see Pub. 505. If you for Taxpayer Advocate Service (TAS) as-

• Do not file more than one original re- have pension or annuity income, use Form sistance. You can reach TAS by calling the turn for the same year, even if you have not W-4P. If you receive certain government National Taxpayer Advocate helpline at gotten your refund or have not heard from payments (such as unemployment compen- 1 - 8 7 7 - 7 7 7 - 4 7 7 8 o r T T Y / T D D the IRS since you filed. Filing more than sation or social security benefits), you can 1-800-829-4059.

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Protect yourself from suspicious emails or longer. For example, keep property records taxpayer’s social security number should phishing schemes. Phishing is the creation (including those on your home) as long as not be used for tax years after the year of and use of email and websites designed to they are needed to figure the basis of the death, except for estate tax return purposes. mimic legitimate business emails and web- original or replacement property. For more

Claiming a Refund for asites. The most common form is sending an details, see chapter 1 of Pub. 17. email to a user falsely claiming to be an Deceased Taxpayer established legitimate enterprise in an at-

If you are filing a joint return as a survivingtempt to scam the user into surrendering spouse, you only need to file the tax returnAmended Returnprivate information that will be used for to claim the refund. If you are a court-ap-identity theft. File Form 1040X to change a return you pointed representative, file the return andalready filed. Generally, Form 1040X mustThe IRS does not initiate contacts with include a copy of the certificate that showsbe filed within 3 years after the date thetaxpayers via emails. Also, the IRS does your appointment. All other filers request-original return was filed or within 2 yearsnot request detailed personal information ing the deceased taxpayer’s refund mustafter the date the tax was paid, whichever isthrough email or ask taxpayers for the PIN file the return and attach Form 1310.later. But you may have more time to filenumbers, passwords, or similar secret ac-

Form 1040X if you live in a federally de- For more details, use TeleTax topic 356cess information for their credit card, bank, clared disaster area or you are physically or or see Pub. 559.or other financial accounts. mentally unable to manage your financial

If you receive an unsolicited email affairs. See Pub. 556 for details. claiming to be from the IRS, forward the Past Due Returnsmessage to [email protected]. You may also report misuse of the IRS name, logo, If you or someone you know needs to fileNeed a Copy of Yourforms, or other IRS property to the Trea- past due tax returns, use TeleTax topic 153 sury Inspector General for Tax Administra- or go to www.irs.gov/individuals for helpTax Return? tion toll-free at 1-800-366-4484 or TTY/ in filing those returns. Send the return toIf you need a copy of your tax return, useTDD 1-800-877-8339. You can forward the address that applies to you in the latestForm 4506. There is a $57 fee (subject tosuspicious emails to the Federal Trade Form 1040 instructions. For example, ifchange) for each return requested. If yourCommission at [email protected] or contact you are filing a 2008 return in 2012, use themain home, principal place of business, orthem a t www.f tc .gov / id the f t o r address at the end of these instructions.tax records are located in a federally de-1-877-IDTHEFT (1-877-438-4338) or However, if you got an IRS notice, mail theclared disaster area, this fee will be waived.TTY/TDD 1-866-653-4261. return to the address in the notice.If you want a free transcript of your tax

Visit IRS.gov and enter “identity theft” return or account, use Form 4506-T or in the search box to learn more about iden- 4506T-EZ, visit IRS.gov and click on “Or- tity theft and how to reduce your risk. der a Tax Return or Account Transcript,” or Other Ways To Get

call us at 1-800-908-9946. Help Send Your Written TaxHow Do You Make a Questions to the IRSDeath of a TaxpayerGift To Reduce Debt You should get an answer in about 30 days.If a taxpayer died before filing a return forHeld By the Public? For the mailing address, call us at2011, the taxpayer’s spouse or personal 1-800-829-1040 (hearing impaired custom-If you wish to do so, make a check payable representative may have to file and sign a ers with access to TTY/TDD equipmentto “Bureau of the Public Debt.” You can return for that taxpayer. A personal repre- may call 1-800-829-4059). Do not sendsend it to: Bureau of the Public Debt, De- sentative can be an executor, administrator, questions with your return.partment G, P.O. Box 2188, Parkersburg, or anyone who is in charge of the deceased

WV 26106-2188. Or you can enclose the taxpayer’s property. If the deceased tax- Research Your Taxcheck with your income tax return when payer did not have to file a return but had

you file. Do not add your gift to any tax you tax withheld, a return must be filed to get a Questions Online may owe. See the instructions for line 76 refund. The person who files the return You can find answers to many of your taxfor details on how to pay any tax you owe. must enter “Deceased,” the deceased questions online. Go to www.irs.gov/indi- Go to www.publicdebt.treas.gov/ for infor- taxpayer’s name, and the date of death viduals. Here are some of the methods you mation on how to make this type of gift across the top of the return. If this informa- may want to try. online. tion is not provided, it may delay the • Frequently asked questions. This sec-processing of the return.

tion contains an extensive list of questionsYou may be able to deduct this and answers. You can select your questionIf your spouse died in 2011 and you didgift on your 2012 tax return. by category or keyword.not remarry in 2011, or if your spouse died

TIP in 2012 before filing a return for 2011, you • Tax trails. This is an interactive sec- can file a joint return. A joint return should tion which asks questions you can answer show your spouse’s 2011 income before by selecting “Yes” or “No.” death and your income for all of 2011. • Main index of tax topics. This is anHow Long Should Enter “Filing as surviving spouse” in the online version of the TeleTax topics. area where you sign the return. If someoneRecords Be Kept? • Interactive Tax Assistant (ITA). The else is the personal representative, he or she ITA provides answers to a limited numberKeep a copy of your tax return, worksheets must also sign. of tax law questions using a probe and re-you used, and records of all items appear-

sponse process.ing on it (such as Forms W-2 and 1099) The surviving spouse or personal repre- until the statute of limitations runs out for sentative should promptly notify all payers Free Tax Return Assistancethat return. Usually, this is 3 years from the of income, including financial institutions, date the return was due or filed or 2 years of the taxpayer’s death. This will ensure the Free help with your return. If you need from the date the tax was paid, whichever is proper reporting of income earned by the assistance preparing your return, visit the later. You should keep some records taxpayer’s estate or heirs. A deceased nearest Volunteer Income Tax Assistance

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(VITA) or Tax Counseling for the Elderly can explain IRS letters, request adjustments If you include interest or penalties (TCE) site in your community. There are to your account, or help you set up a pay- (other than the estimated tax penalty) with over 12,000 sites nationwide and each site ment plan. Call your local Taxpayer Assis- your payment, identify and enter the is staffed by volunteers who are trained and tance Center for an appointment. To find amount in the bottom margin of Form certified to prepare federal income tax re- the number, go to www.irs.gov/localcon- 1040, page 2. Do not include interest or turns. VITA sites are also available at inter- tacts or look in the phone book under penalties (other than the estimated tax pen- na t iona l and domes t i c mi l i t a ry “United States Government, Internal Reve- alty) in the amount you owe on line 76. installations. nue Service.”

InterestVolunteers in this program must adhere IRS Videosto strict quality and ethical standards and We will charge you interest on taxes not pass a certification test each year. VITA The IRS Video portal www.IRSvideos.gov paid by their due date, even if an extension volunteers assist low to moderate income contains video and audio presentations on of time to file is granted. We will also (generally under $50,000 in adjusted gross topics of interest to small businesses, indi- charge you interest on penalties imposed income) taxpayers and TCE volunteers as- viduals, and tax professionals. You will for failure to file, negligence, fraud, sub- sist elderly taxpayers (age 60 and older). find video clips of tax topics, archived ver- stantial valuation misstatements, substan-

sions of live panel discussions and tial understatements of tax, and reportableAvailable services. Free electronic filing is Webinars, and audio archives of tax practi- transaction understatements. Interest isoffered and volunteers will help you claim tioner phone forums. charged on the penalty from the due date ofthe earned income credit, child tax credit,

the return (including extensions).credit for the elderly, and other credits and Help for People Withdeductions you can take. Disabilities PenaltiesWhat to bring. These are some of the Telephone help is available using TTY/items to bring to the VITA/TCE site to Late filing. If you do not file your return T D D e q u i p m e n t b y c a l l i n ghave your tax return prepared. by the due date (including extensions), the 1-800-829-4059. Braille materials are penalty is usually 5% of the amount due for• Proof of identification. available at libraries that have special serv- each month or part of a month your return• Social security cards for you, your ices for people with disabilities. is late, unless you have a reasonable expla-spouse and dependents and/or a social se-

nation. If you do, include it with your re-curity number verification letter issued by Tax Services in Other turn. The penalty can be as much as 25% ofthe Social Security Administration. Languages the tax due. The penalty is 15% per month,• Individual taxpayer identification up to a maximum of 75%, if the failure toTo better serve taxpayers whose native lan-number (ITIN) assignment letter for you, file is fraudulent. If your return is moreguage is not English, we have products andyour spouse and dependents. than 60 days late, the minimum penalty willservices in various languages.• Proof of foreign status, if applying for be $135 or the amount of any tax you owe, For Spanish speaking taxpayers, wean ITIN. whichever is smaller.

have:• Birth dates for you, your spouse, and Late payment of tax. If you pay your taxes• Spanish Publication 17, El Impuestoany dependents. late, the penalty is usually 1⁄2 of 1% of theFederal sobre los Ingresos, and• Form(s) W-2, W-2G, 1099-INT, unpaid amount for each month or part of a• www.irs.gov/espanol.1099-DIV, and 1099-R. month the tax is not paid. The penalty can• A copy of your 2010 federal and state We also offer a Basic Tax Responsibili- be as much as 25% of the unpaid amount. It

returns, if available. ties CD/DVD in the following languages. applies to any unpaid tax on the return. This • A blank check or anything that shows penalty is in addition to interest charges on• Spanish.

your bank routing and account numbers for late payments.• Chinese.direct deposit. • Vietnamese. Frivolous return. In addition to any other• Total paid to daycare provider and the • Korean. penalties, the law imposes a penalty ofdaycare provider’s tax identification num- $5,000 for filing a frivolous return. A frivo-• Russian.ber (the provider’s social security number lous return is one that does not contain in-To get a copy of this CD/DVD, call theor the provider’s business employer identi- formation needed to figure the correct taxNat ional Dis t r ibut ion Center a tfication number). or shows a substantially incorrect tax be-1-800-829-3676 and ask for Pub. 4580 in• To file taxes electronically on a joint cause you take a frivolous position or de-your language.return, both spouses must be present to sign sire to delay or interfere with the tax laws.the required forms. The IRS Taxpayer Assistance This includes altering or striking out the

Find a site near you and get additional in- Centers provide over-the-phone preprinted language above the space where formation. For more information on these interpreter assistance in more you sign. For a list of positions identified as

TIP programs and a location in your commu- than 170 different languages. frivolous, see Notice 2010-33, 2010-17 nity, go to IRS.gov and enter keyword To find the number, see Everyday Tax So- I.R.B. 609, available at “VITA” in the search box. You may also lutions above. www.irs.gov/irb/2010-17_IRB/ar13.html. contact us at 1-800-829-1040. To locate the nearest AARP Tax-Aide site, visit AARP’s Other. Other penalties can be imposed for website at www.aarp.org/money/taxaide or negligence, substantial understatement ofInterest and Penaltiescall 1-888-227-7669. tax, reportable transaction understatements,

filing an erroneous refund claim, and fraud.You do not have to figure the amount ofEveryday Tax Solutions Criminal penalties may be imposed forany interest or penalties you may owe. Be- willful failure to file, tax evasion, or mak-You can get face-to-face help solving tax cause figuring these amounts can be com- ing a false statement. See Pub. 17 for de-problems every business day in IRS Tax- plicated, we will do it for you if you want. tails on some of these penalties.payer Assistance Centers. An employee We will send you a bill for any amount due.

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Refund Information • Your filing status, and visiting the iTunes app store or the

You can go Android Marketplace. IRS2Go is a• The exact whole dollar amount ofo n l i n e t o new way to provide you with infor-your refund.check the sta- mation and tools. tus of your refund 72 hours after IRS ac- • You can call 1-800-829-4477 24Refunds are sent out weekly onknowledges receipt of your e-filed return,

hours a day, 7 days a week, forFridays. If you check the statusor 3 to 4 weeks after you mail a paper automated refund information.of your refund and are not givenreturn. But if you filed Form 5405, 8379, or

TIP the date it will be issued, please8839 with your return, allow 14 weeks (11

Do not send in a copy of your returnwait until the next week before checkingweeks if you filed electronically) before unless asked to do so.back.checking your refund status.

Go to IRS.gov and click on To get a refund, you generally must fileIf you do not have Internet ac- Where’s My Refund. Have a your return within 3 years from the date thecess, you have two options: copy of your tax return handy. return was due (including extensions). You will need to provide the

following information from your return: • You can check the status of your Refund information also is available in • Your social security number (or indi- refund on the new IRS phone app. Spanish at www.irs.gov/espanol and the

vidual taxpayer identification number), Download the free IRS2Go app by phone number listed above.

What Is TeleTax? Recorded Tax Topics by Internet

TeleTax topics are also available at Information www.irs.gov/taxtopics.

Recorded tax information is available 24 hours a day, 7 days a week. Select the num- ber of the topic you want to hear. Then, call 1-800-829-4477. Have paper and pencil handy to take notes.

Topic TopicTeleTax Topics No. Subject No. Subject 153 What to do if you haven’t filed your 203 Refund offsets: For unpaid child

tax return support and certain federal, state, Topic 154 Form W-2 and Form 1099-R (What and unemployment compensation No. Subject to do if incorrect or not received) debts

155 Forms and publications—How to 204 Offers in compromise order 205 Innocent spouse relief (IncludingIRS Help Available

156 Copy of your tax return—How to separation of liability and equitable 101 IRS services—Volunteer tax get one relief)

assistance, toll-free telephone, 157 Change of address—How to notify 206 Dishonored payments walk-in assistance, and outreach IRS

Alternative Filing Methodsprograms 158 Ensuring proper credit of payments 102 Tax assistance for individuals with 159 Prior year(s) Form W-2 (How to get 253 Substitute tax formsdisabilities and the hearing impaired a copy) 254 How to choose a tax return preparer103 Tax help for small businesses and 160 Form 1099-A (Acquisition or 255 Self-select PIN signature method forself-employed Abandonment of Secured Property) online registration104 Taxpayer Advocate Service—Your and Form 1099-C (Cancellation of

voice at the IRS General InformationDebt) 105 Armed Forces tax information

301 When, where, and how to fileCollection107 Tax relief in disaster situations 303 Checklist of common errors when

201 The collection process preparing your tax returnIRS Procedures 202 Tax payment options 304 Extension of time to file your tax 151 Your appeal rights return 152 Refund information 305 Recordkeeping

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Topic TopicTeleTax Topics No. Subject No. Subject ��� �� ��� 502 Medical and dental expenses 752 Form W-2—Where, when, and how

503 Deductible taxes to fileTopic 504 Home mortgage points 753 Form W-4—Employee’sNo. Subject 505 Interest expense Withholding Allowance Certificate 306 Penalty for underpayment of 506 Charitable contributions 755 Employer identification number

estimated tax 508 Miscellaneous expenses (EIN)—How to apply 307 Backup withholding 509 Business use of home 756 Employment taxes for household 308 Amended returns 510 Business use of car employees 309 Roth IRA contributions 511 Business travel expenses 757 Forms 941 and 944—Deposit 310 Coverdell education savings 512 Business entertainment expenses requirements

accounts 513 Educational expenses 758 Form 941—Employer’s Quarterly 311 Power of attorney information 514 Employee business expenses Federal Tax Return and Form 312 Disclosure authorizations 515 Casualty, disaster, and theft losses 944—Employer’s Annual Federal 313 Qualified tuition programs (QTPs) (including federally declared Tax Return

disaster areas) 759 A business credit is available forWhich Forms to File qualified employers under The Hire Act of 2010352 Which form—1040, 1040A, or Tax Computation 761 Tips—Withholding and reporting1040EZ?

762 Independent contractor vs. employee356 Decedents 551 Standard deduction 763 The Affordable Care Act of 2010552 Tax and credits figured by the IRSTypes of Income offers employers new tax deductions553 Tax on a child’s investment income

and credits554 Self-employment tax401 Wages and salaries 556 Alternative minimum tax403 Interest received Electronic Media Filers—1099557 Tax on early distributions from404 Dividends Series and Related Informationtraditional and Roth IRAs407 Business income Returns558 Tax on early distributions from409 Capital gains and losses

retirement plans, other than IRAs 801 Who must file electronically410 Pensions and annuities 802 Applications, forms, and411 Pensions—The general rule and the

informationsimplified method Tax Credits 803 Waivers and extensions412 Lump-sum distributions 804 Test files and combined federal and413 Rollovers from retirement plans 601 Earned income credit (EIC)

state filing414 Rental income and expenses 602 Child and dependent care credit 805 Electronic filing of information415 Renting residential and vacation 607 Adoption credit and adoption

returnsproperty assistance programs for 2010 and 416 Farming and fishing income 2011 Tax Information for Aliens and417 Earnings for clergy 608 Excess social security and RRTA U.S. Citizens Living Abroad418 Unemployment compensation tax withheld 419 Gambling income and expenses 610 Retirement savings contributions 851 Resident and nonresident aliens 420 Bartering income credit 856 Foreign tax credit 421 Scholarship and fellowship grants 611 First-time homebuyer 857 Individual taxpayer identification 423 Social security and equivalent credit—Purchases made in 2008 number (ITIN)—Form W-7

railroad retirement benefits 612 First-time homebuyer 858 Alien tax clearance 424 401(k) plans credit—Purchases made in 2009,

Tax Information for Residents425 Passive activities—Losses and 2010, and 2011 of Puerto Ricocredits

427 Stock options 901 Is a person with income fromIRS Notices429 Traders in securities (information Puerto Rican sources required to file for Form 1040 filers) 651 Notices—What to do a U.S. federal income tax return?

430 Exchange of policyholder interest 652 Notice of underreported 902 Credits and deductions for taxpayers for stock income—CP 2000 with Puerto Rican source income

431 Canceled debt—Is it Income or 653 IRS notices and bills, penalties, and that is exempt from U.S. tax Not? interest charges 903 Federal employment tax in Puerto

RicoAdjustments to Income 904 Tax assistance for residents ofBasis of Assets, Depreciation,451 Individual retirement arrangements Puerto Ricoand Sale of Assets(IRAs)

452 Alimony paid 701 Sale of your home Topic numbers are effective 453 Bad debt deduction 703 Basis of assets January 1, 2012. 455 Moving expenses 704 Depreciation 456 Student loan interest deduction 705 Installment sales 457 Tuition and fees deduction 458 Educator expense deduction

Employer Tax Information Itemized Deductions

751 Social security and Medicare 501 Should I itemize? withholding rates

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If you cannot find the answer to your question in these instructions or online, please call us for assistance. See Making the Call below. You will not be charged for the call unless yourCalling the IRS phone company charges you for toll-free calls. Our normal hours of operation are Monday through Friday from 7:00 a.m. to 10:00 p.m. local time. Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone.

If you want to check the status of your 2011 refund, see Refund Information, earlier.TIP

• Your personal identification number call 1-800-829-4059). Our menu allows (PIN) if you have one. you to speak your responses or use yourBefore You Call

keypad to select a menu option. After re-• Your date of birth.IRS representatives care about the quality ceiving your menu selection, the system• The numbers in your street address.of the service provided to you, our cus- will direct your call to the appropriate as-• Your ZIP code.tomer. You can help us provide accurate, sistance. complete answers to your questions by hav- If you are asking for an installment ing the following information available. agreement to pay your tax, you will be

• The tax form, schedule, or notice to asked for the highest amount you can pay which your question relates. each month and the date on which you can Before You Hang Up

pay it.• The facts about your particular situa- If you do not fully understand the answertion. The answer to the same question often Evaluation of services provided. The IRS you receive, or you feel our representativevaries from one taxpayer to another be- uses several methods to evaluate our tele- may not fully understand your question,cause of differences in their age, income, phone service. One method is to record our representative needs to know this. Hewhether they can be claimed as a depen- telephone calls for quality purposes only. A or she will be happy to take additional timedent, etc. random sample of recorded calls is selected to be sure your question is answered fully.• The name of any IRS publication or for review through the quality assurance By law, you are responsible for payingother source of information that you used to process. Other methods include listening to your share of federal income tax. If welook for the answer. live calls in progress and random selection should make an error in answering your

of customers for participation in a customerTo maintain your account security, you question, you are still responsible for the satisfaction survey.may be asked for the following informa- payment of the correct tax. Should this oc-

tion, which you should also have available. cur, however, you will not be charged any • Your social security number. penalty. • The amount of refund and filing status Making the Callshown on your tax return. • The “Caller ID Number” shown at the Call 1-800-829-1040 (hearing impaired

top of any notice you received. customers with TTY/TDD equipment may

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Quick and Easy Access to Tax Help and Tax Forms and Publications

If you live outside the United States, see Pub. 54 to find out how to get help and tax forms and publications.TIP

Internet Phone You can access IRS.gov 24 hours a day, 7 days a week.

TeleTax information - 24 hour tax information. Call 1-800-829-4477. See the earlier list of tax topic numbers and de-Online services and help. Go to IRS.gov to obtain information on: tails.• Free File—Use free tax software to prepare and e-file your tax Tax forms and publications. Call 1-800-TAX-FORMreturn at www.irs.gov/freefile. (1-800-829-3676) to order current and prior year forms, instruc-• Interactive Tax Assistant—Provides answers to tax law ques- tions, and publications. You should receive your order within 10tions using a probe and response process. working days.• Online Services—Conduct business with the IRS electroni- Tax help and questions. Call 1-800-829-1040.cally.

Hearing Impaired TTY/TDD. Call 1-800-829-4059.• Taxpayer Advocate Service — Helps taxpayers resolve problems with the IRS. National Taxpayer Advocate helpline. Call 1-877-777-4778.

• Where’s My Refund—Your refund status anytime from any- where. Walk-In• Free Tax Return Preparation—Locate the site nearest you.

• Recent Tax Changes You can pick up some of the most requested forms, instructions, and publications at many• Tax information for Innocent Spouses IRS offices, post offices, and libraries. Also,• Disaster Tax Relief some grocery stores, copy centers, city and• Identity Theft and Your Tax Records county government offices, and credit unions

• Online Payment Agreement (OPA) Application have reproducible tax forms and publications available to photo- copy or print from a DVD.• Applying for Offers in Compromise

View and download tax forms and publications. Click on “Forms Mail & Pubs” or go to www.irs.gov/formspubs to:

You can order forms, instructions, and publica-• View or download current and previous year tax forms and tions by completing the order blank, later. Youpublications. should receive your order within 10 days after we• Order current year tax forms and publications online. receive your request.

Online ordering of tax forms and publications. To order tax forms and publications delivered by mail, go to www.irs.gov/formspubs. DVD• For current year tax forms and publications, click on “Forms and publications by U.S. mail.” Buy IRS Pub. 1796, IRS Tax Products DVD,

from National Technical Information Service• For tax forms and publications on a DVD, click on “Tax (NTIS) at www.irs.gov/cdorders for $30 (no han-products DVD (Pub. 1796).” dling fee) or call 1-877-233-6767 toll-free to buy the DVD for $30 (plus a $6 handling fee). PriceTo get information, forms, and publications in Spanish, and handling fee are subject to change. The first release will shipgo to www.irs.gov/espanol. early January 2012 and the final release will ship early March 2012.TIP

Other ways to get help. See Other Ways To Get Help, earlier.

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Disclosure, Privacy Act, and Paperwork Reduction Act Notice

If you do not file a return, do not provide the Please keep this notice with your records. ItThe IRS Restructuring and Reform Act of 1998, information we ask for, or provide fraudulent may help you if we ask you for other informa-the Privacy Act of 1974, and the Paperwork information, you may be charged penalties and tion. If you have questions about the rules forReduction Act of 1980 require that when we ask be subject to criminal prosecution. We may also filing and giving information, please call or visityou for information we must first tell you our have to disallow the exemptions, exclusions, any Internal Revenue Service office.legal right to ask for the information, why we are credits, deductions, or adjustments shown on theasking for it, and how it will be used. We must tax return. This could make the tax higher oralso tell you what could happen if we do not

We Welcome Comments onreceive it and whether your response is volun- delay any refund. Interest may also be charged. tary, required to obtain a benefit, or mandatory Forms under the law. Generally, tax returns and return information

We try to create forms and instructions that canThis notice applies to all papers you file with are confidential, as stated in Code section 6103. be easily understood. Often this is difficult to dous, including this tax return. It also applies to However, Code section 6103 allows or requires because our tax laws are very complex. Forany questions we need to ask you so we can the Internal Revenue Service to disclose or give some people with income mostly from wages,complete, correct, or process your return; figure the information shown on your tax return to

your tax; and collect tax, interest, or penalties. filling in the forms is easy. For others who haveothers as described in the Code. For example, we businesses, pensions, stocks, rental income, orOur legal right to ask for information is Inter- may disclose your tax information to the Depart- other investments, it is more difficult.nal Revenue Code sections 6001, 6011, and ment of Justice to enforce the tax laws, both civil

6012(a), and their regulations. They say that you and criminal, and to cities, states, the District of must file a return or statement with us for any tax If you have suggestions for making theseColumbia, and U.S. commonwealths or posses- you are liable for. Your response is mandatory forms simpler, we would be happy to hear fromsions to carry out their tax laws. We may dis-under these sections. Code section 6109 requires

you. You can email us at [email protected] your tax information to the Department ofyou to provide your identifying number on the Treasury and contractors for tax administration Please put “Forms Comment” on the subjectreturn. This is so we know who you are, and can purposes; and to other persons as necessary to line. You can also send us comments from www.process your return and other papers. You must obtain information needed to determine the irs.gov/formspubs/. Select “Comment on Taxfill in all parts of the tax form that apply to you. amount of or to collect the tax you owe. We may Forms and Publications” under “InformationBut you do not have to check the boxes for the disclose your tax information to the ComptrollerPresidential Election Campaign Fund or for the About.” Or you can write to Internal Revenue General of the United States to permit thethird-party designee. You also do not have to Service, Individual and Specialty Forms and

provide your daytime phone number. Comptroller General to review the Internal Rev- Publications Branch, SE:W:CAR:MP:T:I, 1111 enue Service. We may disclose your tax infor- Constitution Ave. NW, IR-6526, Washington,You are not required to provide the informa- mation to committees of Congress; federal,tion requested on a form that is subject to the DC 20224. Do not send your return to this ad- state, and local child support agencies; and toPaperwork Reduction Act unless the form dis- dress. Instead, see the addresses at the end of other federal agencies for the purposes of deter-plays a valid OMB control number. Books or these instructions. mining entitlement for benefits or the eligibilityrecords relating to a form or its instructions must

be retained as long as their contents may become for and the repayment of loans. We may also Although we cannot respond individually tomaterial in the administration of any Internal disclose this information to other countries

each comment received, we do appreciate yourRevenue law. under a tax treaty, to federal and state agencies feedback and will consider your comments asto enforce federal nontax criminal laws, or toWe ask for tax return information to carry we revise our tax forms and instructions.federal law enforcement and intelligence agen-out the tax laws of the United States. We need it

cies to combat terrorism.to figure and collect the right amount of tax.

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fewer arithmetic errors, implying lower post-fil- Within each of these estimates there is sig-Estimates of Taxpayer Burden ing burden. nificant variation in taxpayer activity. For exam-

The table below shows burden estimates based ple, nonbusiness taxpayers are expected to haveReported time and cost burdens are nationalon current statutory requirements as of October an average burden of about 12 hours and $150,averages and do not necessarily reflect a “typi-21, 2011, for taxpayers filing a 2011 Form 1040, while business taxpayers are expected to have ancal” case. Most taxpayers experience lower than1040A, or 1040EZ tax return. Time spent and average burden of about 32 hours and $410.average burden, with taxpayer burden varyingout-of-pocket costs are presented separately. Similarly, tax preparation fees and otherconsiderably by taxpayer type. For instance, the Time burden is broken out by taxpayer activity, out-of-pocket costs vary extensively dependingestimated average time burden for all taxpayers with recordkeeping representing the largest on the tax situation of the taxpayer, the type offiling a Form 1040, 1040A, or 1040EZ is 18 component. Out-of-pocket costs include any ex- software or professional preparer used, and thehours, with an average cost of $230 per return.

geographic location.penses incurred by taxpayers to prepare and sub- This average includes all associated forms and mit their tax returns. Examples include tax schedules, across all preparation methods and If you have comments concerning the time return preparation and submission fees, postage taxpayer activities. The average burden for tax- and cost estimates below, you can contact us at and photocopying costs, and tax preparation payers filing Form 1040 is about 22 hours and either one of the addresses shown under We software costs. While these estimates do not in- $290; the average burden for taxpayers filing Welcome Comments on Forms. clude burden associated with post-filing activi- Form 1040A is about 10 hours and $120; and the ties, IRS operational data indicate that average for Form 1040EZ filers is about 7 hours electronically prepared and filed returns have and $50.

Estimated Average Taxpayer Burden for Individuals by Activity

Average Time Burden (Hours)

Average Primary Form Filed or Percentage Total Record Tax Form Form All Cost Type of Taxpayer of Returns Time* Keeping Planning Completion Submission Other (Dollars)**

All taxpayers . . . . . . . . . . . 100 18 8 2 4 1 3 $230 Primary forms filed

1040 . . . . . . . . . . . . . 68 22 10 3 4 1 3 290 1040A . . . . . . . . . . . 19 10 4 1 3 1 2 120 1040EZ . . . . . . . . . . . 13 7 2 1 2 1 1 50

Type of taxpayer Nonbusiness*** . . . . . 70 12 5 2 3 1 2 150 Business*** . . . . . . . . 30 32 16 4 6 1 4 410

*Detail may not add to total time due to rounding. **Dollars rounded to the nearest $10. ***You are considered a “business” filer if you file one or more of the following with Form 1040: Schedule C, C-EZ, E, or F or Form 2106 or 2106-EZ. You are considered a “nonbusiness” filer if you did not file any of those schedules or forms with Form 1040 or if you file Form 1040A or 1040EZ.

- 95 -

Order Form for Forms and Publications For faster ways of getting the items you need, go to www.irs.gov/formspubs.

How To Use the Order Form

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Cut here

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City

Order Form Please Print

Apt./Suite/Room

Foreign country

Daytime phone number

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( )

1040A

2441

1040

1040-V

1040EZ

Pub. 590

8917

Schedule A (1040)

Pub. 1

1040-ES (2012) Pub. 523

Pub. 910

Schedule C (1040)

1040X

4562

Pub. 17

Pub. 526

Schedule D (1040)

2106

Pub. 334

Pub. 527

4868

Schedule E (1040)

6251

Pub. 463

Pub. 529

Schedule F (1040)

Pub. 505

Schedule EIC (1040A or

1040)

Pub. 596

8822

Schedule C-EZ (1040)

8283

8606

Pub. 501

Pub. 575

Pub. 554

Schedule H (1040)

Pub. 915

Schedule J (1040)

8812

Pub. 970

8949

Pub. 972

4506

Pub. 535

4684

Pub. 525

Pub. 547

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4506-T

Pub. 587

Pub. 551

Pub. 583

Pub. 946

Pub. 46815405

Schedule B (1040A or

1040) Schedule R (1040A or

1040)

Schedule SE (1040)

3903

8829

8863

Pub. 502 Pub. 550

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Major Categories of Federal Income and Outlays for Fiscal Year 2010

Income and Outlays. These pie charts show the relative sizes of the major categories of federal income and outlays for fiscal year 2010.

Income Outlays Personal income

taxes 26%

Excise, customs, estate, gift, and miscellaneous

taxes 6%

Corporate income taxes

6%

Social security, Medicare, and unemployment and other

retirement taxes 25%

Law enforcement and general government

2%

Social security, Medicare, and other

retirement 1 36%

National defense, veterans, and foreign

affairs 2 24%

Net interest on the debt

6%

Physical, human, and community development 3

7%

Social programs 4

25%

Borrowing to cover deficit

37%

On or before the first Monday in February and outlays were $3,456 billion, leaving a 3. Physical, human, and community of each year the President is required by deficit of $1,293 billion. development: These outlays were for agri- law to submit to the Congress a budget culture; natural resources; environment;Footnotes for Certain Federal proposal for the fiscal year that begins the transportation; aid for elementary and sec-Outlaysfollowing October. The budget plan sets ondary education and direct assistance to forth the President’s proposed receipts, college students; job training; deposit in-1. Social security, Medicare, and spending, and the surplus or deficit for the surance, commerce and housing credit, andother retirement: These programs provide Federal government. The plan includes rec- community development; and space, en-income support for the retired and disabled ommendations for new legislation as well ergy, and general science programs.and medical care for the elderly. as recommendations to change, eliminate, 4. Social programs: About 16% of total2. National defense, veterans, and for-and add programs. After receipt of the outlays were for Medicaid, food stamps,eign affairs: About 20% of outlays were toPresident’s proposal, the Congress reviews temporary assistance for needy families,equip, modernize, and pay our armedthe proposal and makes changes. It first supplemental security income, and relatedforces and to fund national defense activi-passes a budget resolution setting its own programs; and the remaining outlays wereties; about 3% were for veterans benefitstargets for receipts, outlays, and surplus or for health research and public health pro-and services; and about 1% were for inter-deficit. Next, individual spending and reve- grams, unemployment compensation, as-national activities, including military andnue bills that are consistent with the goals sisted housing, and social services.economic assistance to foreign countriesof the budget resolution are enacted.

and the maintenance of U.S. embassies In fiscal year 2010 (which began on Oc- abroad.

tober 1, 2009, and ended on September 30, 2010), Federal income was $2,163 billion

Note. The percentages shown here exclude undistributed offsetting receipts, which were $82 billion in fiscal year 2010. In the budget, these receipts are offset against spending in figuring the outlay totals shown above. These receipts are for the U.S. Government’s share of its employee retirement programs, rents and royalties on the Outer Continental Shelf, and proceeds from the sale of assets.

- 97 -

2011 Tax Rate Schedules

The Tax Rate Schedules are shown so you can see the tax rate that applies to all levels of taxable income. Do not use them to figure your tax. Instead, see the instructions for line 44.

Schedule Z—If your filing status is Head of household

Schedule X—If your filing status is Single

The tax is:If your taxable income is: of the

amount over—

But not over—Over—

Schedule Y-2—If your filing status is Married filing separately

Schedule Y-1—If your filing status is Married filing jointly or Qualifying widow(er)

The tax is:If your taxable income is: of the

amount over—

But not over—Over—

The tax is:If your taxable income is: of the

amount over—

But not over—Over—

The tax is:If your taxable income is: of the

amount over—

But not over—Over—

CAUTION

$0

8,500

34,500

83,600

174,400

379,150

$8,500

34,500

83,600

174,400

379,150

$0

8,500

34,500

83,600

174,400

379,150

$0

17,000

69,000

139,350

212,300

379,150

$0

8,500

34,500

69,675

106,150

189,575

$0

12,150

46,250

119,400

193,350

379,150

$17,000

69,000

139,350

212,300

379,150

$8,500

34,500

69,675

106,150

189,575

$12,150

46,250

119,400

193,350

379,150

$0

17,000

69,000

139,350

212,300

379,150

$0

8,500

34,500

69,675

106,150

189,575

$0

12,150

46,250

119,400

193,350

379,150

10%

$850.00 + 15%

4,750.00 + 25%

17,025.00 + 28%

42,449.00 + 33%

110,016.50 + 35%

10%

$1,700.00 + 15%

9,500.00 + 25%

27,087.50 + 28%

47,513.50 + 33%

102,574.00 + 35%

10%

$850.00 + 15%

4,750.00 + 25%

13,543.75 + 28%

23,756.75 + 33%

51,287.00 + 35%

10%

$1,215.00 + 15%

6,330.00 + 25%

24,617.50 + 28%

45,323.50 + 33%

106,637.50 + 35%

- 98 -

Internal Revenue Service

2011 Instructions for Schedule A (Form 1040)

Use Schedule A (Form 1040) to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standardItemized deduction.

If you itemize, you can deduct a part of your medical and dental expenses and un-Deductions reimbursed employee business expenses, and amounts you paid for certain taxes, interest, contributions, and miscellaneous expenses. You can also deduct certain casualty and theft losses.

If you and your spouse paid expenses jointly and are filing separate returns for 2011, see Pub. 504 to figure the portion of joint expenses that you can claim as itemized deductions.

Do not include on Schedule A items deducted elsewhere, such as on Form 1040 or Schedule C, C-EZ, E, or F.

• Diagnostic tests, such as a full-bodyExamples of Medical and scan, pregnancy test, or blood sugar test kit.Dental Payments You Can • Nursing help (including your share ofDeduct the employment taxes paid). If you paid

To the extent you were not reimbursed, you someone to do both nursing and house- can deduct what you paid for: work, you can deduct only the cost of theWhat’s New nursing help.• Insurance premiums for medical and

Standard mileage rates. The rate for use of dental care, including premiums for quali- • Hospital care (including meals and your vehicle to get medical care from Janu- fied long-term care insurance contracts as lodging), clinic costs, and lab fees. ary 1, 2011 through June 30, 2011 is 19 defined in Pub. 502. But see Limit on • Qualified long-term care services (see cents a mile and from July 1, 2011 through long-term care premiums you can deduct, Pub. 502).

later. Reduce the insurance premiums byDecember 31, 2011 is 23.5 cents a mile. • The supplemental part of Medicare in-any self-employed health insurance deduc-The 2011 rate for use of your vehicle to do surance (Medicare B).tion you claimed on Form 1040, line 29.volunteer work for certain charitable orga- • The premiums you pay for MedicareYou cannot deduct insurance premiumsnizations remains at 14 cents a mile. Part D insurance.paid with pretax dollars because the premi- ums are not included in box 1 of your • A program to stop smoking and for

Future developments. For the latest infor- Form(s) W-2. If you are a retired public prescription medicines to alleviate nicotine mation about Schedule A (Form 1040) and safety officer, you cannot deduct any pre- withdrawal. its instructions, including any develop- miums you paid to the extent they were • A weight-loss program as treatment ments after these instructions were re- paid for with a tax-free distribution from for a specific disease (including obesity)

your retirement plan.leased, go to www.irs.gov/form1040. diagnosed by a doctor. • Medical treatment at a center for drugIf, during 2011, you were an el- or alcohol addiction.igible trade adjustment assis- • Medical aids such as eyeglasses, con-tance (TAA) rec ip ien t ,Medical and Dental tact lenses, hearing aids, braces, crutches,alternative TAA (ATAA) recip-

wheelchairs, and guide dogs, including theient, reemployment TAA (RTAA) recipi-Expenses cost of maintaining them.ent, or Pension Benefit Guaranty You can deduct only the part of your medi- Corporation (PBGC) pension recipient, • Surgery to improve defective vision, cal and dental expenses that exceeds 7.5% you must reduce your insurance premiums such as laser eye surgery or radial ker-

by any amounts used to figure the health atotomy.of the amount on Form 1040, line 38. coverage tax credit. See the instructions for • Lodging expenses (but not meals) line 1. while away from home to receive medicalPub. 502 discusses the types of ex-

care in a hospital or a medical care facilitypenses you can and cannot deduct. It also • Prescription medicines or insulin. related to a hospital, provided there was noexplains when you can deduct capital ex- • Acupuncturists, chiropractors, den- significant element of personal pleasure,penses and special care expenses for dis- tists, eye doctors, medical doctors, occupa- recreation, or vacation in the travel. Do notabled persons. tional therapists, osteopathic doctors, deduct more than $50 a night for each eligi- physical therapists, podiatrists, psychia- ble person. trists, psychoanalysts (medical care only),If you received a distribution • Ambulance service and other travel and psychologists.from a health savings account costs to get medical care. If you used your

or a medical savings account in • Medical examinations, X-ray and lab- own car, you can claim what you spent for 2011, see Pub. 969 to figure oratory services, insulin treatment, and gas and oil to go to and from the place you

your deduction. whirlpool baths your doctor ordered. received the care; or you can claim 19 cents

A-1 Cat. No. 53061XNov 29, 2011

a mile (23.5 cents a mile after June 30, (for example, a nondependent child underLine 12011). Add parking and tolls to the amount age 27). You cannot deduct any premiums you claim under either method. attributable to this individual, unless theyMedical and Dental• Cost of breast pumps and supplies that are such a person described under Whose

Expensesassist lactation. medical and dental expenses can you in- Enter the total of your medical and dental clude, earlier. However, if you had family expenses, after you reduce these expenses coverage when you added this individual toDeceased taxpayer. Certain medical ex- by any payments received from insurance your policy and your premiums did not in-penses paid out of a deceased taxpayer’s or other sources. See Reimbursements, crease, you can enter on line 1 the fullestate can be claimed on the deceased later.taxpayer’s final return. See Pub. 502 for amount of your medical and dental insur-

details. ance premiums. See Pub. 502 for more in-Do not forget to include insur- formation.ance premiums you paid for

Limit on long-term care premiums you can medical and dental care. But if TIP

deduct. The amount you can deduct for you claimed the self-employed Reimbursements. If your insurance com- qualified long-term care insurance con- health insurance deduction on Form 1040, pany paid the provider directly for part of tracts (as defined in Pub. 502) depends on line 29, reduce the premiums by the amount your expenses, and you paid only thethe age, at the end of 2011, of the person for on line 29. amount that remained, include on line 1whom the premiums were paid. See the

only the amount you paid. If you received aIf, during 2011, you were an el-chart below for details. reimbursement in 2011 for medical or den-igible trade adjustment assis- tal expenses you paid in 2011, reduce yourtance (TAA) rec ip ien t ,IF the person THEN the most 2011 expenses by this amount. If you re-alternative TAA (ATAA) recip-was, at the end you can deduct ceived a reimbursement in 2011 for priorient, reemployment TAA (RTAA) recipi-of 2011, age . . . is . . . year medical or dental expenses, do notent, or Pension Benefit Guaranty

40 or under $ 340 Corporation (PBGC) pension recipient, reduce your 2011 expenses by this amount. you must complete Form 8885 before com- But if you deducted the expenses in the41–50 $ 640 pleting Schedule A, line 1. When figuring earlier year and the deduction reduced your the amount of insurance premiums you can51–60 $ 1,270 tax, you must include the reimbursement in deduct on Schedule A, do not include: income on Form 1040, line 21. See Pub.61–70 $ 3,390 • Any amounts you included on 502 for details on how to figure the amount

Form 8885, line 4,71 or older $ 4,240 to include. • Any qualified health insurance pre-

miums you paid to Cafeteria plans. Do not include on line 1“U.S. Treasury—HCTC,” or insurance premiums paid by anExamples of Medical and • Any health coverage tax credit ad- employer-sponsored health insurance planDental Payments You vance payments shown in box 1 (cafeteria plan) unless the premiums areand any additional credit reportedCannot Deduct included in box 1 of your Form(s) W-2.in the box to the left of box 8 of Also, do not include any other medical and• The cost of diet food. Form 1099-H. dental expenses paid by the plan unless the• Cosmetic surgery unless it was neces-

Whose medical and dental expenses can amount paid is included in box 1 of yoursary to improve a deformity related to a you include? You can include medical and Form(s) W-2.congenital abnormality, an injury from an dental bills you paid for anyone who wasaccident or trauma, or a disfiguring disease. one of the following either when the serv-• Life insurance or income protection ices were provided or when you paid forpolicies. them. Taxes You Paid• The Medicare tax on your wages and • Yourself and your spouse.tips or the Medicare tax paid as part of the Taxes You Cannot Deduct• All dependents you claim on your re-self-employment tax or household employ- turn.ment taxes. • Federal income and most excise taxes.• Your child whom you do not claim as • Social security, Medicare, federal un- a dependent because of the rules for chil- employment (FUTA), and railroad retire-If you were age 65 or older but dren of divorced or separated parents.not entitled to social security ment (RRTA) taxes.• Any person you could have claimed asbenefits, you can deduct premi- • Customs duties.

TIP a dependent on your return except that per-ums you voluntarily paid for • Federal estate and gift taxes. But seeson received $3,700 or more of gross in-Medicare A coverage.

the instructions for line 28.come or filed a joint return.• Nursing care for a healthy baby. But • Certain state and local taxes, includ-• Any person you could have claimed asyou may be able to take a credit for the ing: tax on gasoline, car inspection fees,a dependent except that you, or your spouseamount you paid. See the instructions for assessments for sidewalks or other im-if filing jointly, can be claimed as a depen-Form 1040, line 48. provements to your property, tax you paiddent on someone else’s 2011 return.• Illegal operations or drugs. for someone else, and license fees (mar-

Example. You provided over half of• Imported drugs not approved by the riage, driver’s, dog, etc.). your mother’s support but cannot claim herU.S. Food and Drug Administration as a dependent because she received wages(FDA). This includes foreign-made ver-

sions of U.S.-approved drugs manufactured of $3,700 in 2011. You can include on line without FDA approval. 1 any medical and dental expenses you paid Line 5

in 2011 for your mother.• Nonprescription medicines (including You can elect to deduct state nicotine gum and certain nicotine patches). and local general sales taxes in-Insurance premiums for certain

• Travel your doctor told you to take for stead of state and local incomenondependents. You may have a medical rest or a change. taxes. You cannot deductor dental insurance policy that also covers

• Funeral, burial, or cremation costs. an individual who is not your dependent both. A-2

vehicle. Do not include sales taxes paid on • Nontaxable part of IRA, pension, orState and Local Income items used in your trade or business. annuity distributions. Do not include rollo-Taxes vers.

You must keep your actual re-If you elect to deduct state and local income • Public assistance payments.ceipts showing general salestaxes, you must check box a on line 5. The exemptions column refers to the num-taxes paid to use this method.Include on this line the state and local in- ber of exemptions claimed on Form 1040, come taxes listed below. line 6d.

Refund of general sales taxes. If you re-• State and local income taxes withheld What if you lived in more than one ceived a refund of state or local generalfrom your salary during 2011. Your state? If you lived in more than one state sales taxes in 2011 for amounts paid inForm(s) W-2 will show these amounts. during 2011, look up the table amount for 2011, reduce your actual 2011 state andForms W-2G, 1099-G, 1099-R, and each state using the above rules. If there is local general sales taxes by this amount. If1099-MISC may also show state and local no table for your state, the table amount is you received a refund of state or local gen-income taxes withheld. considered to be zero. Multiply the table eral sales taxes in 2011 for prior year• State and local income taxes paid in amount for each state you lived in by a purchases, do not reduce your 2011 state2011 for a prior year, such as taxes paid fraction. The numerator of the fraction is and local general sales taxes by thiswith your 2010 state or local income tax the number of days you lived in the state amount. But if you deducted your actualreturn. Do not include penalties or interest. during 2011 and the denominator is the to- state and local general sales taxes in the tal number of days in the year (365). Enter• State and local estimated tax pay- earlier year and the deduction reduced your the total of the prorated table amounts forments made during 2011, including any tax, you may have to include the refund in each state on line 1. However, if you alsopart of a prior year refund that you chose to income on Form 1040, line 21. See Recov- lived in a locality during 2011 that imposedhave credited to your 2011 state or local eries in Pub. 525 for details. a local general sales tax, do not enter theincome taxes.

total on line 1. Instead, complete a separateOptional Sales Tax Tables• Mandatory contributions you made to worksheet for each state you lived in andInstead of using your actual expenses, youthe California, New Jersey, or New York enter the prorated amount for that state oncan use the 2011 Optional State and CertainNonoccupational Disability Benefit Fund, line 1.Local Sales Tax Table and the 2011 Op-Rhode Island Temporary Disability Benefit

Example. You lived in State A fromtional Local Sales Tax Tables for CertainFund, or Washington State Supplemental January 1 through August 31, 2011 (243Local Jurisdictions at the end of these in-Workmen’s Compensation Fund. days), and in State B from September 1structions to figure your state and local• Mandatory contributions to the through December 31, 2011 (122 days).general sales tax deduction. You may alsoAlaska, California, New Jersey, or Penn- The table amount for State A is $500. Thebe able to add the state and local generalsylvania state unemployment fund. table amount for State B is $400. Yousales taxes paid on certain specified items.• Mandatory contributions to state fam- would figure your state general sales tax as

To figure your state and local generalily leave programs, such as the New Jersey follows. sales tax deduction using the tables, com-Family Leave Insurance (FLI) program and plete the State and Local General Sales Taxthe California Paid Family Leave program. State A: $500 x 243/365 = $333 Deduction Worksheet or use the Sales Tax State B: $400 x 122/365 = 134Do not reduce your deduction by any: Deduction Calculator on the IRS website. Total = $467• State or local income tax refund or To use the Sales Tax Deduction Calculator,

credit you expect to receive for 2011, or go to IRS.gov and enter “sales tax deduc- If none of the localities in which you tion calculator” in the search box. lived during 2011 imposed a local general• Refund of, or credit for, prior year

sales tax, enter $467 on line 1 of yourstate and local income taxes you actually If your filing status is married worksheet. Otherwise, complete a separatereceived in 2011. Instead, see the instruc- filing separately, both you and worksheet for State A and State B. Entertions for Form 1040, line 10. your spouse elect to deduct $333 on line 1 of the State A worksheet andsales taxes, and your spouseState and Local General $134 on line 1 of the State B worksheet.elects to use the optional sales tax tables, Sales Taxes you also must use the tables to figure your Line 2. If you checked the “No” box, enter

state and local general sales tax deduction. -0- on line 2, and go to line 3. If youIf you elect to deduct state and local general checked the “Yes” box and lived in thesales taxes, you must check box b on line Instructions for the State and same locality for all of 2011, enter the ap-5. To figure your deduction, you can use Local General Sales Tax plicable amount, based on your 2011 in-either your actual expenses or the optional Deduction Worksheet come and exemptions, from the 2011sales tax tables.

Line 1. If you lived in the same state for all Optional Local Sales Tax Tables for Cer- Actual Expenses of 2011, enter the applicable amount, based tain Local Jurisdictions for your locality.

on your 2011 income and exemptions, from Read down the “At least–But less than”Generally, you can deduct the actual state the 2011 Optional State and Certain Local columns for your locality and find the lineand local general sales taxes (including Sales Tax Table for your state. Read down that includes your 2011 income. See thecompensating use taxes) you paid in 2011 the “At least–But less than” columns for instructions for line 1 of the worksheet toif the tax rate was the same as the general your state and find the line that includes figure your 2011 income. The exemptionssales tax rate. However, sales taxes on your 2011 income. If married filing sepa- column refers to the number of exemptionsfood, clothing, medical supplies, and motor rately, do not include your spouse’s in- claimed on Form 1040, line 6d.vehicles are deductible as a general sales come. Your 2011 income is the amounttax even if the tax rate was less than the What if you lived in more than one lo- shown on your Form 1040, line 38, plusgeneral sales tax rate. If you paid sales tax cality? If you lived in more than one local- any nontaxable items, such as the follow-on a motor vehicle at a rate higher than the ity during 2011, look up the table amount ing.general sales tax rate, you can deduct only for each locality using the above rules. If

the amount of tax that you would have paid there is no table for your locality, the table• Tax-exempt interest. at the general sales tax rate on that vehicle. amount is considered to be zero. Multiply• Veterans’ benefits. Motor vehicles include cars, motorcycles, the table amount for each locality you lived• Nontaxable combat pay.motor homes, recreational vehicles, sport in by a fraction. The numerator of the frac-

• Workers’ compensation.utility vehicles, trucks, vans, and off-road tion is the number of days you lived in the vehicles. Also include any state and local • Nontaxable part of social security and locality during 2011 and the denominator is general sales taxes paid for a leased motor railroad retirement benefits. the total number of days in the year (365).

A-3

State and Local General Sales Tax Deduction Worksheet—Line 5b Keep for Your Records

If you lived in more than one locality in the each prorated table amount on line 2 of the You would figure the amount to enter on same state and the local general sales tax applicable worksheet. line 2 as follows. Note that this amount rate was the same for each locality, enter may not equal your local sales tax deduc-

Example. You lived in Locality 1 fromthe total of the prorated table amounts for tion, which is figured on line 6 of the work- January 1 through August 31, 2011 (243each locality in that state on line 2. Other- sheet. days), and in Locality 2 from September 1wise, complete a separate worksheet for through December 31, 2011 (122 days).lines 2 through 6 for each locality and enter The table amount for Locality 1 is $100. The table amount for Locality 2 is $150.

Instead of using this worksheet, you can find your deduction by using the Sales Tax Deduction Calculator at IRS.gov. TIP

��������� � ��� � See the instructions for line 1 of the worksheet if you: � Lived in more than one state during 2011, or � Had any nontaxable income in 2011.

1. Enter your state general sales taxes from the 2011 Optional State and Certain Local Sales Tax Table 1. $

Next. If, for all of 2011, you lived only in Connecticut, the District of Columbia, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Jersey, Rhode Island, or West Virginia, skip lines 2 through 5, enter -0- on line 6, and go to line 7. Otherwise, go to line 2.

2. Did you live in Alaska, Arizona, Arkansas, California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, Missouri, New York, North Carolina, South Carolina, Tennessee, Utah, or Virginia in 2011?

No. Enter -0- } . . . . . . . . . . . 2. $ Yes. Enter your base local general sales taxes from the 2011 Optional Local Sales Tax Tables for Certain Local Jurisdictions

3. Did your locality impose a local general sales tax in 2011? Residents of California and Nevada see the instructions for line 3 of the worksheet.

No. Skip lines 3 through 5, enter -0- on line 6, and go to line 7.

Yes. Enter your local general sales tax rate, but omit the percentage sign. For example, if your local general sales tax rate was 2.5%, enter 2.5. If your local general sales tax rate changed or you lived in more than one locality in the same state during 2011, see the instructions for line 3 of the worksheet . . . . . . . . . . . . 3. .

4. Did you enter -0- on line 2 above?

No. Skip lines 4 and 5 and go to line 6.

Yes. Enter your state general sales tax rate (shown in the table heading for your state), but omit the percentage sign. For example, if your state general sales tax rate is 6%, enter 6.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. .

5. Divide line 3 by line 4. Enter the result as a decimal (rounded to at least three places) 5. .

6. Did you enter -0- on line 2 above?

No. Multiply line 2 by line 3

Yes. Multiply line 1 by line 5. If you lived in more than one locality in } . . . . . . . . . . . . . . . . . . $6.the same state during 2011, see the instructions for line 6 of the worksheet

7. Enter your state and local general sales taxes paid on specified items, if any. See the instructions for line 7 of the worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. $

8. Deduction for general sales taxes. Add lines 1, 6, and 7. Enter the result here and the total from all your state and local general sales tax deduction worksheets, if you completed more than one, on Schedule A, line 5. Be sure to check box b on that line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. $

A-4

Locality 1 worksheet and “0.585” for theLocality 1: $100 x 243/365 = $ 67 Line 6Locality 2: $150 x 122/365 = 50 Locality 2 worksheet, figured as follows. Total = $117 Real Estate TaxesLocality 1: 1.00 x 243/365 = 0.666

Locality 2: 1.75 x 122/365 = 0.585Line 3. If you lived in California, check the If you are a homeowner who “No” box if your combined state and local received assistance under a general sales tax rate is 7.7459%. Other- State Housing Finance Agency

TIP Line 6. If you lived in more than one local-wise, check the “Yes” box and include on Hardest Hit Fund program or an ity in the same state during 2011, youline 3 only the part of the combined rate Emergency Homeowners’ Loan program, should have completed line 1 only on thethat is more than 7.7459%. see Pub. 530 for the amount you can deduct first worksheet for that state and separate on line 6.If you lived in Nevada, check the “No” worksheets for lines 2 through 6 for anybox if your combined state and local gen- Include taxes (state, local, or foreign) other locality within that state in which youeral sales tax rate is 6.8500%. Otherwise, you paid on real estate you own that was lived during 2011. If you checked thecheck the “Yes” box and include on line 3 not used for business, but only if the taxes “Yes” box on line 6 of any of those work-only the part of the combined rate that is are based on the assessed value of the prop- sheets, multiply line 5 of that worksheet bymore than 6.8500%. erty. Also, the assessment must be made the amount that you entered on line 1 for uniformly on property throughout the com-What if your local general sales tax rate that state on the first worksheet. munity, and the proceeds must be used forchanged during 2011? If you checked the

general community or governmental pur-“Yes” box and your local general sales tax poses. Pub. 530 explains the deductionsrate changed during 2011, figure the rate to Line 7. Enter on line 7 any state and local homeowners can take.enter on line 3 as follows. Multiply each tax general sales taxes paid on the following

rate for the period it was in effect by a Do not include the following amountsspecified items. If you are completing more fraction. The numerator of the fraction is on line 6.than one worksheet, include the total for the number of days the rate was in effect line 7 on only one of the worksheets. • Itemized charges for services to spe-during 2011 and the denominator is the to- cific property or persons (for example, a1. A motor vehicle (including a car, mo-tal number of days in the year (365). Enter $20 monthly charge per house for trash col-torcycle, motor home, recreational vehicle,the total of the prorated tax rates on line 3. lection, a $5 charge for every 1,000 gallonssport utility vehicle, truck, van, andExample. Locality 1 imposed a 1% lo- of water consumed, or a flat charge for

off-road vehicle). Also include any statecal general sales tax from January 1 mowing a lawn that had grown higher than and local general sales taxes paid for athrough September 30, 2011 (273 days). permitted under a local ordinance). leased motor vehicle. If the state sales taxThe rate increased to 1.75% for the period • Charges for improvements that tend torate on these items is higher than the gen-from October 1 through December 31, increase the value of your property (for ex-

2011 (92 days). You would enter “1.189” eral sales tax rate, only include the amount ample, an assessment to build a new side- on line 3, figured as follows. of tax you would have paid at the general walk). The cost of a property improvement

sales tax rate. is added to the basis of the property. How-January 1 – 2. An aircraft or boat, if the tax rate was ever, a charge is deductible if it is used onlySeptember 30: 1.00 x 273/365 = 0.748 the same as the general sales tax rate. to maintain an existing public facility inOctober 1 –

service (for example, a charge to repair an3. A home (including a mobile home orDecember 31: 1.75 x 92/365 = 0.441 existing sidewalk, and any interest includedprefabricated home) or substantial additionTotal = 1.189 in that charge).to or major renovation of a home, but only

What if you lived in more than one if the tax rate was the same as the general If your mortgage payments include your locality in the same state during 2011? sales tax rate and any of the following ap- real estate taxes, you can deduct only the Complete a separate worksheet for lines 2 amount the mortgage company actuallyplies. through 6 for each locality in your state if paid to the taxing authority in 2011.a. Your state or locality imposes a gen-you lived in more than one locality in the

If you sold your home in 2011, any realeral sales tax directly on the sale of a homesame state during 2011 and either of the estate tax charged to the buyer should befollowing applies. or on the cost of a substantial addition or shown on your settlement statement and inmajor renovation.• Each locality did not have the same box 5 of any Form 1099-S you received.local general sales tax rate. b. You purchased the materials to build This amount is considered a refund of reala home or substantial addition or to per-• You lived in Los Angeles County, estate taxes. See Refunds and rebates be-form a major renovation and paid the salesCA. low. Any real estate taxes you paid at clos-

tax directly. ing should be shown on your settlementTo figure the amount to enter on line 3 c. Under your state law, your contractor statement.of the worksheet for each locality in which

is considered your agent in the constructionyou lived (except a locality for which you You must look at your real es-of the home or substantial addition or theused the 2011 Optional Local Sales Tax tate tax bill to decide if any non-performance of a major renovation. TheTables for Certain Local Jurisdictions to deductible itemized charges,contract must state that the contractor isfigure your local general sales tax deduc- such as those listed above, aretion), multiply the local general sales tax authorized to act in your name and must

included in the bill. If your taxing authorityrate by a fraction. The numerator of the follow your directions on construction de- (or lender) does not furnish you a copy offraction is the number of days you lived in cisions. In this case, you will be considered your real estate tax bill, ask for it.the locality during 2011 and the denomina- to have purchased any items subject to a

tor is the total number of days in the year sales tax and to have paid the sales tax Refunds and rebates. If you received a re- (365). directly. fund or rebate in 2011 of real estate taxes

Example. You lived in Locality 1 from you paid in 2011, reduce your deduction by January 1 through August 31, 2011 (243 the amount of the refund or rebate. If you

Do not include sales taxes paid on itemsdays), and in Locality 2 from September 1 received a refund or rebate in 2011 of real used in your trade or business. If you re-through December 31, 2011 (122 days). estate taxes you paid in an earlier year, do ceived a refund of state or local generalThe local general sales tax rate for Locality not reduce your deduction by this amount. sales taxes in 2011, see Refund of general1 is 1%. The rate for Locality 2 is 1.75%. Instead, you must include the refund or re- sales taxes, earlier.You would enter “0.666” on line 3 for the bate in income on Form 1040, line 21, if

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you deducted the real estate taxes in the commodations including sleeping space, tract the amount shown on Form 8396, line earlier year and the deduction reduced your toilet, and cooking facilities. 3, from the total deductible interest you tax. See Recoveries in Pub. 525 for details paid on your home mortgage. Enter the re-Limit on home mortgage interest. If youon how to figure the amount to include in sult on line 10.took out any mortgages after October 13,income. 1987, your deduction may be limited. Any Line 11

additional amounts borrowed after October If you did not receive a Form 1098 from the13, 1987, on a line-of-credit mortgage you recipient, report your deductible mortgagehad on that date are treated as a mortgageLine 7 interest on line 11.taken out after October 13, 1987. If you

Personal Property Taxes refinanced a mortgage you had on October If you bought your home from the recip- 13, 1987, treat the new mortgage as taken ient, be sure to show that recipient’s name,Enter the state and local personal property out on or before October 13, 1987. But if identifying number, and address on thetaxes you paid, but only if the taxes were you refinanced for more than the balance of dotted lines next to line 11. If the recipientbased on value alone and were imposed on the old mortgage, treat the excess as a mort- is an individual, the identifying number isa yearly basis. gage taken out after October 13, 1987. his or her social security number (SSN).

Example. You paid a yearly fee for the Otherwise, it is the employer identificationSee Pub. 936 to figure your deduction ifregistration of your car. Part of the fee was number. You must also let the recipienteither (1) or (2) below applies. If you hadbased on the car’s value and part was based know your SSN. If you do not show themore than one home at the same time, theon its weight. You can deduct only the part required information about the recipient ordollar amounts in (1) and (2) apply to theof the fee that was based on the car’s value. let the recipient know your SSN, you maytotal mortgages on both homes. have to pay a $50 penalty.

1. You took out any mortgages after Oc- If you and at least one other persontober 13, 1987, and used the proceeds forLine 8 (other than your spouse if filing jointly)purposes other than to buy, build, or im-

were liable for and paid interest on theprove your home, and all of these mort-Other Taxes mortgage, and the other person received thegages totaled over $100,000 at any time If you had any deductible tax not listed on Form 1098, attach a statement to your re-during 2011. The limit is $50,000 if mar- line 5, 6, or 7, list the type and amount of turn showing the name and address of thatried filing separately. An example of this tax. Enter only one total on line 8. Include person. To the right of line 11, enter “Seetype of mortgage is a home equity loan on this line income tax you paid to a foreign attached.”used to pay off credit card bills, buy a car, country or U.S. possession. or pay tuition.

2. You took out any mortgages after Oc-You may want to take a credit Line 12tober 13, 1987, and used the proceeds tofor the foreign tax instead of a buy, build, or improve your home, anddeduction. See the instructions Points Not Reported onthese mortgages plus any mortgages you

TIP for Form 1040, line 47, for de- Form 1098took out on or before October 13, 1987,tails.

totaled over $1 million at any time during Points are shown on your settlement state- 2011. The limit is $500,000 if married fil- ment. Points you paid only to borrow ing separately. money are generally deductible over the

life of the loan. See Pub. 936 to figure theInterest You Paid amount you can deduct. Points paid forIf the total amount of all mort-Whether your interest expense is treated as other purposes, such as for a lender’s serv-gages is more than the fair mar-investment interest, personal interest, or ices, are not deductible.ket value of the home,business interest depends on how and when

additional limits apply. See Refinancing. Generally, you must deductyou used the loan proceeds. See Pub. 535 Pub. 936. points you paid to refinance a mortgagefor details.

over the life of the loan. This is true even ifLine 10In general, if you paid interest in 2011 the new mortgage is secured by your main that applies to any period after 2011, you home.Enter on line 10 mortgage interest and can deduct only amounts that apply for points reported to you on Form 1098 under If you used part of the proceeds to im-2011. your social security number (SSN). If this prove your main home, you may be able to

form shows any refund of overpaid interest, deduct the part of the points related to the do not reduce your deduction by the refund. improvement in the year paid. See Pub. 936 Instead, see the instructions for Form 1040, for details.Lines 10 and 11 line 21. If you and at least one other person

If you paid off a mortgage(other than your spouse if filing jointly)Home Mortgage Interest early, deduct any remainingwere liable for and paid interest on theIf you are a homeowner who points in the year you paid offmortgage, and the interest was reported on

TIP received assistance under a the mortgage. However, if youForm 1098 under the other person’s SSN,State Housing Finance Agency refinanced your mortgage with the samereport your share of the interest on line 11

TIP lender, see Mortgage ending early in Pub.Hardest Hit Fund program or an (as explained in the line 11 instructions). 936 for an exception.Emergency Homeowners’ Loan program,

If you paid more interest to the recipientsee Pub. 530 for the amount you can deduct than is shown on Form 1098, see Pub. 936on line 10 or 11. to find out if you can deduct the additional Line 13A home mortgage is any loan that is interest. If you can, attach a statement ex-

secured by your main home or second plaining the difference and enter “See at- Mortgage Insurance home. It includes first and second mort- tached” to the right of line 10. Premiumsgages, home equity loans, and refinanced

If you are claiming the mort- Enter the qualified mortgage insurance pre-mortgages. gage interest credit (for holders miums you paid under a mortgage insur-

A home can be a house, condominium, of qualified mortgage credit ance contract issued after December 31, cooperative, mobile home, boat, or similar certificates issued by state or lo- 2006, in connection with home acquisition property. It must provide basic living ac- cal governmental units or agencies), sub- debt that was secured by your first or sec-

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Mortgage Insurance Premiums Deduction Worksheet—Line 13 Keep for Your Records

ond home. Box 4 of Form 1098 may show mortgage is satisfied before its term, no 2. You have no other deductible invest- the amount of premiums you paid in 2011. deduction is allowed for the unamortized ment expenses. If you and at least one other person (other balance. See Pub. 936 for details. 3. You have no disallowed investmentthan your spouse if filing jointly) were lia- interest expense from 2010.The allocation rules, explained earlier,ble for and paid the premiums in connec-

do not apply to qualified mortgage insur-tion with the loan, and the premiums were ance provided by the Department of Veter-reported on Form 1098 under the other Alaska Permanent Fund divi- ans Affairs or the Rural Housing Serviceperson’s SSN, report your share of the pre- dends, including those reported(or their successor organizations).miums on line 13. See Prepaid mortgage on Form 8814, are not invest-insurance premiums below if you paid any ment income.premiums allocable to any period after Limit on amount you can deduct. You

2011. cannot deduct your mortgage insurance For more details, see Pub. 550.premiums if the amount on Form 1040, lineQualified mortgage insurance is mort- 38, is more than $109,000 ($54,500 if mar-gage insurance provided by the Department ried filing separately). If the amount onof Veterans Affairs, the Federal Housing Form 1040, line 38, is more than $100,000Administration, or the Rural Housing Serv- ($50,000 if married filing separately), your Gifts to Charityice (or their successor organizations), and deduction is limited and you must use theprivate mortgage insurance (as defined in You can deduct contributions or gifts youMortgage Insurance Premiums Deductionsection 2 of the Homeowners Protection gave to organizations that are religious,Worksheet to figure your deduction.Act of 1998 as in effect on December 20, charitable, educational, scientific, or liter- 2006). ary in purpose. You can also deduct what

you gave to organizations that work to pre-Mortgage insurance provided by the De- vent cruelty to children or animals. CertainLine 14partment of Veterans Affairs and the Rural whaling captains may be able to deductHousing Service is commonly known as a Investment Interest expenses paid in 2011 for Native Alaskanfunding fee and guarantee fee respectively. subsistence bowhead whale hunting activi-Investment interest is interest paid onThese fees can be deducted fully in 2011 if ties. See Pub. 526 for details.the mortgage insurance contract was issued money you borrowed that is allocable to

in 2011. Contact the mortgage insurance property held for investment. It does not To verify an organization’s charitableissuer to determine the deductible amount include any interest allocable to passive ac-

status, you can:if it is not included in box 4 of Form 1098. tivities or to securities that generate tax-ex- empt income. • Check with the organization to whichPrepaid mortgage insurance premiums. If

you made the donation. The organizationyou paid qualified mortgage insurance pre- Complete and attach Form 4952 to fig- should be able to provide you with verifica-miums that are allocable to periods after ure your deduction. tion of its charitable status.2011, you must allocate them over the

shorter of: • See Pub. 78 for a list of most qualified Exception. You do not have to file Form organizations. You can access Pub. 78 at• The stated term of the mortgage, or 4952 if all three of the following apply. www.irs.gov/charities under Search for• 84 months, beginning with the month

Charities.1. Your investment interest expense isthe insurance was obtained. not more than your investment income • Call our Tax Exempt/Government En- from interest and ordinary dividends minus tities Customer Account Services atThe premiums are treated as paid in the

year to which they are allocated. If the any qualified dividends. 1-877-829-5500.

��������� � ��� � � See the instructions for line 13 to see if you must use this worksheet to figure your deduction.

1. Enter the total premiums you paid in 2011 for qualified mortgage insurance for a contract issued after December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter the amount from Form 1040, line 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Enter $100,000 ($50,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . 3. 4. Is the amount on line 2 more than the amount on line 3?

No. Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line 13. Do not complete the rest of this worksheet.

Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000 ($500 if married filing separately), increase it to the next multiple of $1,000 ($500 if married filing separately). For example, increase $425 to $1,000, increase $2,025 to $3,000; or if married filing separately, increase $425 to $500, increase $2,025 to $2,500, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Divide line 4 by $10,000 ($5,000 if married filing separately). Enter the result as a decimal. If the result is 1.0 or more, enter 1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. .

6. Multiply line 1 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and on

Schedule A, line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

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For example, if you gave your church $25 • Gifts to groups whose purpose is toExamples of Qualified lobby for changes in the laws.each week for a total of $1,300, treat eachCharitable Organizations

$25 payment as a separate gift. If you made • Gifts to civic leagues, social and• Churches, mosques, synagogues, tem- donations through payroll deductions, treat sports clubs, labor unions, and chambers of ples, etc. each deduction from each paycheck as a commerce.

separate gift. See Pub. 526 if you made a• Boy Scouts, Boys and Girls Clubs of • Value of benefits received in connec- separate gift of $250 or more through pay-America, CARE, Girl Scouts, Goodwill In- tion with a contribution to a charitable or-

dustries, Red Cross, Salvation Army, roll deduction. ganization. See Pub. 526 for exceptions.United Way, etc. You must get the statement by• Fraternal orders, if the gifts will be the date you file your return orused for the purposes listed under Gifts to

Line 16Charity, earlier. the due date (including exten-TIP sions) for filing your return,• Veterans’ and certain cultural groups. Gifts by Cash or Checkwhichever is earlier. Do not attach the• Nonprofit schools, hospitals, and or-

statement to your return. Instead, keep it for Enter on line 16 the total gifts you made inganizations whose purpose is to find a cure your records. cash or by check (including out-of-pocketfor, or help people who have, arthritis,

expenses).asthma, birth defects, cancer, cerebral Limit on the amount you can deduct. Seepalsy, cystic fibrosis, diabetes, heart dis- Recordkeeping. For any contributionPub. 526 to figure the amount of your de-ease, hemophilia, mental illness or retarda- made in cash, regardless of the amount, youduction if any of the following applies.tion, multiple sclerosis, muscular must maintain as a record of the contribu-dystrophy, tuberculosis, etc. 1. Your cash contributions or contribu- tion a bank record (such as a canceled• Federal, state, and local governments tions of ordinary income property are more check or credit card statement) or a written

if the gifts are solely for public purposes. than 30% of the amount on Form 1040, line record from the charity. The written record 38. must include the name of the charity, date,Contributions You Can and amount of the contribution. If you2. Your gifts of capital gain property areDeduct made contributions through payroll deduc-more than 20% of the amount on Form

tion, see Pub. 526 for information on the1040, line 38.Contributions can be in cash, property, or records you must keep. Do not attach theout-of-pocket expenses you paid to do vol- 3. You gave gifts of property that in- record to your tax return. Instead, keep itunteer work for the kinds of organizations creased in value or gave gifts of the use of with your other tax records.described earlier. If you drove to and from property.

the volunteer work, you can take the actual cost of gas and oil or 14 cents a mile. Add

Contributions You Cannotparking and tolls to the amount you claim Line 17 under either method. But do not deduct any Deduct amounts that were repaid to you. Other Than by Cash or

• Travel expenses (including meals and CheckGifts from which you benefit. If you made lodging) while away from home, unless a gift and received a benefit in return, such Enter your contributions of property. If youthere was no significant element of per- as food, entertainment, or merchandise, gave used items, such as clothing or furni-sonal pleasure, recreation, or vacation in you can generally only deduct the amount ture, deduct their fair market value at thethe travel. that is more than the value of the benefit. time you gave them. Fair market value is• Political contributions.

what a willing buyer would pay a willingBut this rule does not apply to certain mem- • Dues, fees, or bills paid to country seller when neither has to buy or sell andbership benefits provided in return for an clubs, lodges, fraternal orders, or similar both are aware of the conditions of the sale.annual payment of $75 or less or to certain groups. For more details on determining the valueitems or benefits of token value. For de-

• Cost of raffle, bingo, or lottery tickets. of donated property, see Pub. 561.tails, see Pub. 526. But you may be able to deduct these ex-Example. You paid $70 to a charitable If the amount of your deduction is more penses on line 28. See the instructions fororganization to attend a fund-raising dinner than $500, you must complete and attach line 28 for details.and the value of the dinner was $40. You Form 8283. For this purpose, the “amount

• Cost of tuition. But you may be able tocan deduct only $30. of your deduction” means your deduction deduct this expense on line 21; or Form before applying any income limits that

Gifts of $250 or more. You can deduct a 1040, line 34; or take a credit for this ex- could result in a carryover of contributions. gift of $250 or more only if you have a pense (see Form 8863). If you deduct more than $500 for a contri- statement from the charitable organization bution of a motor vehicle, boat, or airplane,• Value of your time or services.showing the information in (1) and (2) next. you must also attach a statement from the• Value of blood given to a blood bank.

charitable organization to your return. The1. The amount of any money contrib- • The transfer of a future interest in tan- organization may use Form 1098-C to pro-uted and a description (but not value) of gible personal property (generally, until the vide the required information. If your totalany property donated. entire interest has been transferred). deduction is over $5,000, you may also2. Whether the organization did or did • Gifts to individuals and groups that have to get appraisals of the values of thenot give you any goods or services in return are run for personal profit. donated property. This amount is $500 forfor your contribution. If you did receive certain contributions of clothing and house-• Gifts to foreign organizations. Butany goods or services, a description and hold items (see below). See Form 8283 andyou may be able to deduct gifts to certainestimate of the value must be included. If its instructions for details.U.S. organizations that transfer funds toyou received only intangible religious ben- foreign charities and certain Canadian, Is-efits (such as admission to a religious cere- Contributions of clothing and household raeli, and Mexican charities. See Pub. 526mony), the organization must state this, but items. A deduction for these contributions for details.it does not have to describe or value the will be allowed only if the items are in good

• Gifts to organizations engaged in cer-benefit. used condition or better. However, this rule tain political activities that are of direct fi- does not apply to a contribution of any sin- nancial interest to your trade or business.In figuring whether a gift is $250 or gle item for which a deduction of more than See section 170(f)(9).more, do not combine separate donations. $500 is claimed and for which you include

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a qualified appraisal and Form 8283 with Corrosive drywall losses. If you paid for have to be required to be considered neces- your tax return. repairs to your personal residence or house- sary.

hold appliances because of corrosive dry- But you must fill in and attach FormRecordkeeping. If you gave property, you wall that was installed between 2001 and 2106 if either (1) or (2), next, applies.should keep a receipt or written statement 2008, you may be able to deduct on line 20 from the organization you gave the prop- 1. You claim any travel, transportation,those amounts paid. See Pub. 547 for de- erty to, or a reliable written record, that meal, or entertainment expenses for yourtails. shows the organization’s name and ad- job.Use Schedule A, line 23, to deduct thedress, the date and location of the gift, and a 2. Your employer paid you for any ofcosts of proving that you had a propertydescription of the property. For each gift of your job expenses that you would other-loss. Examples of these costs are appraisalproperty, you should also keep reliable wise report on line 21.fees and photographs used to establish thewritten records that include:

amount of your loss.• How you figured the property’s value If you used your own vehicle, at the time you gave it. If the value was are using the standard mileage determined by an appraisal, keep a signed rate, and (2) above does not ap-

TIP copy of the appraisal. ply, you may be able to fileJob Expenses and Form 2106-EZ instead.• The cost or other basis of the property if you must reduce it by any ordinary in- If you do not have to file Form 2106 orCertain Miscellaneous come or capital gain that would have re- 2106-EZ, list the type and amount of each sulted if the property had been sold at its Deductions expense on the dotted line next to line 21. If fair market value. you need more space, attach a statementYou can deduct only the part of these ex-• How you figured your deduction if showing the type and amount of each ex-penses that exceeds 2% of the amount on you chose to reduce your deduction for pense. Enter the total of all these expensesForm 1040, line 38. gifts of capital gain property. on line 21.Pub. 529 discusses the types of ex-• Any conditions attached to the gift. penses that can and cannot be deducted. Do not include on line 21 any

educator expenses you de-If your total deduction for gifts Examples of Expenses You ducted on Form 1040, line 23.of property is over $500, you Cannot Deduct gave less than your entire inter-

Examples of other expenses to include• Political contributions.est in the property, or you made on line 21 are:a “qualified conservation contribution,” • Legal expenses for personal matters

your records should contain additional in- that do not produce taxable income. • Safety equipment, small tools, and formation. See Pub. 526 for details. supplies needed for your job.• Lost or misplaced cash or property.

• Uniforms required by your employer• Expenses for meals during regular or that are not suitable for ordinary wear.extra work hours.

Line 18 • Protective clothing required in your• The cost of entertaining friends. work, such as hard hats, safety shoes, and• Commuting expenses. See Pub. 529Carryover From Prior Year glasses.for the definition of commuting.

Enter any carryover of contributions that • Physical examinations required by• Travel expenses for employment you could not deduct in an earlier year be- your employer.away from home if that period of employ- cause they exceeded your adjusted gross ment exceeds 1 year. See Pub. 529 for an • Dues to professional organizations income limit. See Pub. 526 for details. exception for certain federal employees. and chambers of commerce.

• Travel as a form of education. • Subscriptions to professional journals. • Expenses of attending a seminar, con- • Fees to employment agencies and

vention, or similar meeting unless it is re- other costs to look for a new job in yourCasualty and Theft lated to your employment. present occupation, even if you do not get a • Club dues. new job.Losses • Expenses of adopting a child. But you • Certain business use of part of your

may be able to take a credit for adoption home. For details, including limits that ap- expenses. See Form 8839 for details. ply, use TeleTax topic 509 (see the FormLine 20

1040 instructions) or see Pub. 587.• Fines and penalties. Complete and attach Form 4684 to figure • Expenses of producing tax-exempt in- • Certain educational expenses. For de-the amount of your loss to enter on line 20.

come. tails, use TeleTax topic 513 (see the Form You may be able to deduct part or all of 1040 instructions) or see Pub. 970. Reduce

each loss caused by theft, vandalism, fire, your educational expenses by any tuition storm, or similar causes; car, boat, and and fees deduction you claimed on FormLine 21other accidents; and corrosive drywall. You 1040, line 34. may also be able to deduct money you had Unreimbursed Employee You may be able to take a creditin a financial institution but lost because of

for your educational expensesExpensesthe insolvency or bankruptcy of the institu- instead of a deduction. SeeEnter the total ordinary and necessary jobtion.

TIP Form 8863 for details.expenses you paid for which you were not

You can deduct personal casualty or reimbursed. (Amounts your employer in- theft losses only to the extent that: cluded in box 1 of your Form W-2 are not

considered reimbursements.)1. The amount of each separate casualty Line 22 or theft loss is more than $100, and An ordinary expense is one that is com- Tax Preparation Fees2. The total amount of all losses during mon and accepted in your field of trade, the year (reduced by the $100 limit dis- business, or profession. A necessary ex- Enter the fees you paid for preparation of cussed in (1) above) is more than 10% of pense is one that is helpful and appropriate your tax return, including fees paid for fil- the amount on Form 1040, line 38. for your business. An expense does not ing your return electronically. If you paid

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your tax by credit or debit card, include the • Deduction for repayment of amounts 4684, lines 32 and 38b, or Form 4797, line convenience fee you were charged on line under a claim of right if $3,000 or less. 18a. 23 instead of this line. • Convenience fee charged by the card • Loss from other activities from

processor for paying your income tax (in- Schedule K-1 (Form 1065-B), box 2. cluding estimated tax payments) by credit • Federal estate tax on income in re- or debit card. The deduction is claimed for spect of a decedent.Line 23 the year in which the fee was charged to • Amortizable bond premium on bondsyour card.Other Expenses acquired before October 23, 1986.

Enter the total amount you paid to produce • Deduction for repayment of amounts or collect taxable income and manage or under a claim of right if over $3,000. See protect property held for earning income. Pub. 525 for details.Other MiscellaneousBut do not include any personal expenses. • Certain unrecovered investment in a List the type and amount of each expense pension.Deductionson the dotted lines next to line 23. If you • Impairment-related work expenses ofneed more space, attach a statement show-

a disabled person.ing the type and amount of each expense. Line 28Enter one total on line 23. For more details, see Pub. 529. Only the expenses listed next can be de-Examples of expenses to include on line ducted on this line. List the type and23 are: amount of each expense on the dotted lines• Certain legal and accounting fees. next to line 28. If you need more space, Total Itemized• Clerical help and office rent. attach a statement showing the type and

• Custodial (for example, trust account) amount of each expense. Enter one total on Deductions fees. line 28.

• Your share of the investment ex- • Gambling losses (gambling losses in- penses of a regulated investment company. clude, but are not limited to, the cost of Line 30

non-winning bingo, lottery, and raffle tick-• Certain losses on nonfederally insured If you elect to itemize for state tax or otherets), but only to the extent of gamblingdeposits in an insolvent or bankrupt finan- purposes even though your itemized deduc-winnings reported on Form 1040, line 21.cial institution. For details, including limits tions are less than your standard deduction,that apply, see Pub. 529. • Casualty and theft losses of check the box on line 30. income-producing property from Form• Casualty and theft losses of property

used in performing services as an employee from Form 4684, lines 32 and 38b, or Form 4797, line 18a.

A-10

2011 Optional State and Certain Local Sales Tax Tables Income

At least

But less than

Exemptions

1 2 3 4 5 Over

5

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Connecticut1

ColoradoCalifornia1, 2ArkansasAlabama Arizona

District of Columbia FloridaIncome $0

20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Exemptions Exemptions Exemptions

IllinoisIdaho

Hawaii5Georgia

Income

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

1 2 3 4 5 Over

5 1 2 3 4 5 Over

5 1 2 3 4 5 Over

5 1 2 3 4 5 Over

5

MarylandMaineLouisianaKentuckyIncome $0

20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Income

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

4.0000% 6.6000% 6.0000% 7.7459% 2.9000%

Exemptions

6.1764% 6.0000% 6.0000% 4.0000% 4.0000%

Massachusetts

Indiana Iowa Kansas

Michigan Minnesota Mississippi Missouri Nebraska

6.0000% 6.2500% 7.0000% 6.0000% 6.3000%

6.0000% 4.0000% 5.0000% 6.0000% 6.2500%

6.0000% 6.8750% 7.0000% 4.2250% 5.5000%

226 333 385 428

267 392 452 503

295 432 499 554

260 429 516 591

288 473 569 652

305 502 604 691

319 524 630 721

329 541 651 745

344 566 680 778

290 464 553 628

326 521 619 704

348 557 663 753

366 584 695 790

380 607 722 820

399 637 758 862

289 479 577 662

316 522 629 722

333 550 663 761

346 571 688 790

356 588 709 813

370 612 737 845

117 182 215 243

129 201 237 268

137 213 252 284

143 223 262 296

148 230 271 306

155 240 283 320

250 411 495 566

271 446 537 615

285 469 563 645

295 485 583 668

303 498 599 686

314 516 621 711

466 500 532 562 589

547 587 624 658 689

602 646 686 723 757

645 691 734 774 811

681 730 775 816 855

731 783 832 876 918

659 721 779 834 885

726 795 859 919 976

770 843 911 974

1035

803 879 950

1016 1079

830 908 982

1050 1115

867 948

1025 1096 1164

696 757 815 868 919

779 848 913 973

1029

834 907 976

1041 1101

875 952

1025 1092 1155

908 988

1064 1133 1199

954 1038 1118 1191 1260

738 809 875 937 996

806 882 955

1022 1086

849 929

1005 1076 1144

881 964

1043 1117 1187

907 993

1074 1150 1222

942 1032 1116 1195 1269

268 291 312 332 350

295 320 343 365 385

313 339 364 386 408

326 353 379 403 425

337 365 391 416 439

352 381 409 434 458

631 690 746 798 848

685 749 810 867 920

719 787 851 910 966

745 815 881 942

1001

765 837 905 968

1028

793 867 938

1003 1065

625 673 715 756 793

859 924 979

1034 1083

906 974

1032 1090 1141

972 1044 1107 1169 1223

953 1047 1129 1211 1285

1051 1154 1245 1335 1416

1114 1223 1319 1415 1501

1162 1276 1375 1475 1565

1200 1318 1421 1524 1617

1253 1376 1484 1591 1688

985 1076 1155 1234 1305

1104 1206 1294 1382 1462

1181 1289 1384 1479 1563

1239 1353 1452 1551 1640

1286 1405 1508 1610 1703

1351 1476 1584 1692 1789

1073 1180 1274 1367 1452

1170 1287 1389 1490 1582

1233 1355 1462 1569 1666

1279 1406 1517 1628 1729

1317 1447 1562 1676 1779

1368 1504 1622 1741 1848

374 407 436 465 490

412 448 479 510 539

436 474 507 540 570

454 494 528 562 593

469 510 545 580 612

489 532 569 605 638

913 1002 1081 1159 1229

991 1088 1174 1259 1335

1041 1143 1232 1322 1402

1078 1183 1276 1369 1452

1107 1216 1311 1406 1492

1147 1260 1359 1457 1546

1321 1390 1489 1656 1824 1933 2014 2081 2172 1656 1855 1984 2081 2160 2270 1875 2044 2151 2232 2297 2386 617 677 715 744 768 800

1583 1720 1806 1870 1922 1992

191 315 379 434

204 337 406 466

213 352 423 485

220 362 436 500

225 371 446 512

232 383 460 528

253 416 500 572

277 455 547 626

292 480 577 660

303 498 599 686

313 514 617 706

325 534 642 735

160 252 298 338

177 279 330 373

189 296 350 396

197 309 366 414

204 320 378 428

214 335 396 447

253 393 462 521

291 451 531 598

317 490 576 650

336 520 611 689

352 544 640 721

374 578 680 766

339 505 586 654

400 594 688 767

441 654 757 843

473 700 810 902

500 739 855 952

538 794 918

1022

262 403 472 531

294 450 527 592

314 481 563 633

330 505 591 664

343 525 614 689

361 552 646 725

484 530 573 614 652

519 568 615 658 699

541 592 641 685 728

557 610 660 706 750

571 624 675 723 768

588 644 696 745 792

637 697 754 806 856

583 629 673 714 752

702 772 832 893 948

753 827 892 957

1016

784 862 930 997

1059

808 888 958

1027 1090

827 909 980

1051 1116

853 937

1011 1084 1151

921 1012 1091 1169 1241

801 869 928 985

1037

1222 1310 1365 1406 1439 1483 1597

1291

299 462 544 613

332 514 604 680

353 547 643 724

370 571 672 756

383 592 695 783

401 619 728 819

259 427 514 589

288 474 571 654

306 505 608 696

320 528 635 728

331 546 657 754

346 571 688 789

369 560 653 732

435 659 768 861

480 726 846 948

515 778 907

1015

544 822 957

1072

585 883

1028 1151

243 388 461 524

269 428 508 577

286 454 539 612

298 474 562 638

308 489 581 659

322 511 607 688

169 278 334 383

184 303 364 417

194 319 383 439

201 331 398 456

207 340 409 469

160 261 314 359

173 282 338 387

181 295 354 404

187 305 365 418

192 313 375 428

198 323 387 443

233 379 453 518

257 418 501 572

273 444 532 607

285 464 556 634

295 480 575 656

309 502 601 687

207 325 384 435

223 350 413 467

233 365 432 488

241 377 446 504

247 387 457 516

256 400 472 533

232 368 436 494

256 405 479 543

272 429 508 575

283 447 529 599

293 461 546 618

306 481 570 645

245 409 494 568

265 443 535 616

278 464 561 646

287 480 581 668

295 493 597 686

305 511 618 711

424 651 762 856

493 755 884 993

539 825 966

1085

575 879

1029 1156

604 924

1081 1214

645 986

1154 1295

181 286 338 383

206 323 382 432

222 348 411 465

234 367 433 490

244 382 451 510

258 404 477 539

546 593 638 679 718

600 652 701 746 788

635 690 741 789 834

662 718 772 821 868

683 742 797 848 896

712 773 831 884 934

769 839 899 960

1014

844 920 987

1053 1112

892 973

1043 1112 1175

929 1013 1085 1157 1222

959 1045 1120 1194 1261

999 1089 1167 1244 1314

1283 1405 1484 1543 1591 1658

239 391 469 536

264 431 517 592

279 457 549 627

291 477 572 654

301 492 591 676

314 514 616 705

697 762 824 881 936

735 804 869 929 987

764 835 903 966

1025

787 861 930 995

1056

819 895 967

1035 1098

1007 1106 1192 1278 1356

1062 1166 1257 1348 1430

1104 1212 1306 1400 1485

1137 1248 1345 1442 1530

1183 1298 1399 1500 1591

1745 1840 1911 1968 2047

373 405 435 463 489

412 447 480 511 539

437 475 509 542 572

456 495 532 565 597

472 512 550 584 617

493 535 575 611 645

523 570 611 652 688

577 629 674 718 758

612 667 714 761 804

639 696 745 794 838

660 719 770 821 866

690 751 804 857 904

869 956 1013 1056 1090 1138

573 620 664 705 743

658 712 763 809 853

714 773 828 878 926

758 820 878 931 982

793 858 919 975

1028

842 911 976

1035 1091

793 862 921 979

1032

911 989

1057 1124 1184

988 1073 1147 1219 1284

1048 1138 1215 1292 1361

1097 1190 1272 1352 1425

1164 1264 1350 1436 1513

1290 1479 1604 1700 1779 1888

714 768 818 864 907

836 898 957

1010 1060

919 987

1051 1109 1163

984 1056 1124 1186 1244

1037 1114 1185 1250 1311

1113 1195 1271 1340 1406

964 1040 1106 1172 1230

1125 1213 1290 1365 1432

1235 1331 1414 1496 1569

1320 1422 1511 1598 1676

1391 1499 1591 1683 1764

1491 1606 1705 1803 1890

1514 1758 1924 2053 2161 2312

650 702 751 796 838

694 750 802 850 894

728 786 841 891 938

756 816 873 925 973

795 858 917 971

1022

893 968

1033 1097 1154

953 1033 1102 1170 1231

999 1083 1155 1226 1290

1037 1123 1198 1272 1338

1089 1180 1258 1336 1405

1435 1530 1602 1662 1744

674 729 781 829 874

748 810 867 920 970

796 861 922 978

1031

832 900 964

1022 1078

861 931 997

1058 1115

901 974

1043 1107 1166

933 1013 1083 1152 1213

1035 1124 1201 1277 1345

1101 1195 1277 1358 1430

1150 1248 1334 1418 1494

1190 1292 1380 1467 1545

1245 1351 1443 1534 1616

1516 1681 1786 1865 1929 2017 1655 1841 1960 2050 2122 2222 1736 2033 2234 2390 2520 2702

657 719 777 832 884

730 799 864 924 982

777 850 919 984

1045

812 889 961

1029 1093

840 920 995

1065 1131

880 963

1041 1115 1184

801 864 922 976

1027

942 1015 1083 1146 1205

1037 1117 1192 1261 1326

1111 1197 1277 1351 1420

1172 1263 1348 1425 1498

1259 1356 1447 1530 1608

952 1046 1128 1210 1284

1058 1162 1254 1345 1428

1126 1237 1335 1432 1520

1177 1294 1395 1497 1589

1219 1339 1445 1550 1645

1276 1402 1512 1623 1723

1092 1182 1259 1335 1403

1282 1386 1477 1566 1645

1410 1525 1624 1721 1809

1510 1633 1738 1843 1936

1593 1722 1834 1943 2042

1710 1848 1967 2085 2190

580 630 678 723 765

639 695 747 796 842

677 736 792 843 892

706 767 825 879 929

729 793 852 908 960

761 827 890 947

1002

427 467 505 541 574

465 509 550 589 625

490 536 579 620 658

508 555 601 643 682

522 571 618 661 702

542 593 642 686 729

399 436 471 504 534

430 470 508 543 576

450 491 531 567 602

465 507 548 586 621

476 520 562 600 637

492 538 581 621 658

820 895 961

1026 1085

902 985

1057 1129 1193

956 1043 1119 1195 1263

996 1087 1166 1245 1315

1028 1122 1204 1285 1358

1073 1171 1256 1341 1417

618 679 732 785 833

673 740 798 855 908

709 778 839 900 955

735 807 870 933 990

756 830 895 960

1019

785 862 930 997

1058

575 631 680 728 772

619 679 732 784 831

647 710 765 819 868

668 733 789 845 896

685 751 809 867 919

708 776 836 895 949

1377 1512 1600 1666 1720 1793 1074 1169 1230 1275 1312 1362 992 1067 1114 1150 1178 1217

575 628 678 724 768

636 694 749 800 848

675 737 795 850 901

705 770 831 887 941

730 796 859 918 973

763 833 899 960

1018

480 521 559 595 628

515 559 600 638 674

538 584 627 666 703

555 602 646 687 725

569 617 662 704 743

588 637 684 727 767

825 904 973

1042 1104

912 999

1075 1151 1220

968 1061 1142 1223 1295

1011 1108 1193 1277 1353

1046 1146 1234 1321 1400

1094 1199 1291 1382 1464

672 732 784 836 883

721 785 841 896 946

752 819 877 934 986

776 844 904 963

1016

794 865 926 986

1041

820 893 956

1018 1074

1413 1561 1658 1731 1791 1874 1113 1191 1241 1279 1309 1350

635 696 755 809 861

688 755 818 877 934

722 792 859 921 980

747 820 889 953

1014

768 842 913 979

1042

795 873 946

1015 1080

940 1015 1086 1150 1211

1090 1177 1258 1333 1404

1190 1285 1374 1455 1532

1267 1368 1463 1549 1631

1331 1437 1536 1627 1713

1420 1533 1639 1736 1827

423 459 493 524 554

477 518 556 591 624

513 556 597 635 671

540 586 629 669 706

563 610 655 696 735

594 644 691 735 776

597 652 704 753 799

659 720 778 831 882

698 763 824 881 935

728 795 859 919 975

752 822 888 949

1007

785 858 926 990

1051

929 1023 1105 1188 1263

1008 1110 1200 1290 1371

1058 1165 1260 1354 1439

1095 1206 1304 1402 1491

1125 1239 1340 1441 1532

1166 1285 1389 1493 1588

1291 1399 1493 1585 1668

1496 1621 1729 1836 1931

1632 1768 1886 2003 2107

1738 1882 2008 2131 2242

1825 1977 2108 2238 2354

1946 2108 2248 2386 2510

593 646 692 738 780

668 728 779 831 877

717 781 837 892 941

755 823 881 939 991

787 856 917 977

1031

830 903 967

1030 1087

859 943

1016 1088 1154

949 1041 1121 1202 1274

1006 1104 1189 1274 1351

1049 1151 1240 1328 1409

1084 1189 1281 1372 1455

1131 1241 1337 1432 1519

1639 1780 1870 1936 1990 2063 2074 2399 2616 2783 2922 3114 984 1105 1186 1247 1297 1367 1481 1636 1735 1809 1869 1950

1129 1237971

(Continued)

317 464 535 593

335 490 564 626

361 527 607 673

215 353 425 487

731 786 834 882 924

803 863 916 967

1013

A-11

2011 Optional State and Certain Local Sales Tax Tables (Continued) Income

At least

But less than

Exemptions

1 2 3 4 5 Over

5

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

North Dakota

North Carolina1New YorkNew MexicoNevada3 New Jersey4

Ohio OklahomaIncome $0

20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Exemptions Exemptions Exemptions

South DakotaSouth Carolina

Rhode IslandPennsylvania

Income

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

1 2 3 4 5 Over

5 1 2 3 4 5 Over

5 1 2 3 4 5 Over

5 1 2 3 4 5 Over

5

West VirginiaWashingtonVirginiaVermontIncome $0

20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Income

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

6.8500% 7.0000% 5.1250% 4.0000% 5.2459%

Exemptions

5.0000% 5.5000% 4.5000% 6.0000% 7.0000%

Wisconsin

Tennessee Texas Utah

Wyoming

6.0000% 4.0000% 7.0000% 6.2500% 4.7000%

6.0000% 4.0000% 6.5000% 6.0000% 5.0000%

4.0000%

1

2

3

266 420 498 564

293 462 546 619

311 488 578 654

324 509 601 681

334 525 621 702

349 547 647 732

263 436 525 603

282 467 563 646

294 487 587 674

303 502 605 694

310 514 619 711

320 530 639 733

235 391 472 542

252 419 506 581

262 436 527 605

270 449 542 623

276 459 554 637

284 473 571 656

155 255 307 352

167 275 330 378

174 287 345 396

180 296 356 408

185 304 365 419

191 314 378 433

254 397 468 528

289 452 533 602

313 488 576 650

331 516 608 687

345 539 635 717

366 570 672 759

194 303 358 404

218 339 400 452

233 363 428 483

245 382 450 507

255 397 467 527

268 417 492 555

234 382 459 524

255 417 500 572

269 439 527 602

279 456 547 625

287 469 563 644

299 488 585 669

247 382 448 505

288 444 521 587

315 486 571 642

337 519 609 685

354 546 641 721

379 584 686 771

214 348 417 476

230 374 448 512

240 391 468 535

248 403 483 552

254 413 495 566

262 427 511 584

260 404 475 535

283 438 515 580

297 460 541 609

308 476 560 631

316 489 575 648

328 507 596 672

249 406 486 556

273 445 534 610

288 471 564 645

300 489 587 670

309 505 605 691

322 525 630 720

445 482 517 550 580

620 674 721 768 810

1016

238 368 432 486

278 429 504 567

304 470 552 621

325 501 589 663

342 528 619 697

366 564 662 745

389 604 711 802

446 692 814 918

485 751 883 995

514 796 936

1055

538 833 980

1104

572 885

1040 1172

269 439 526 602

299 488 585 668

318 519 622 711

332 542 650 743

344 561 673 770

360 588 705 805

246 387 457 518

280 440 521 589

303 476 562 636

320 503 594 672

335 525 621 702

355 556 657 743

169 265 313 355

177 278 328 372

182 286 338 382

185 291 344 390

188 296 350 396

192 302 357 404

175 268 314 353

199 304 356 400

214 328 383 431

227 346 405 454

237 361 422 474

250 381 446 500

268 444 536 615

294 488 589 676

311 517 623 715

324 538 649 745

335 555 670 769

349 579 698 802

304 484 575 652

348 554 657 746

377 599 712 807

399 635 753 855

417 663 787 893

443 703 835 947

222 361 433 495

244 398 477 545

259 422 505 577

269 439 526 601

278 453 543 620

290 473 566 647

166 274 330 378

181 299 360 412

191 314 378 434

198 326 393 450

204 336 404 463

211 349 420 481

422 461 499 534 567

611 672 724 777 825

1064

Note. Alaska does not have a state sales tax. Alaska residents should follow the instructions on the next page to determine their local sales tax amount.

The rates for California, Connecticut, and North Carolina increased during 2011, so the rates given are averaged over the year. The California table includes the 1.25% uniform local sales tax rate in addition to the 6.4959% blended state sales tax rate for a total of 7.7459%. The Nevada table includes the 2.25% uniform local sales tax rate in addition to the 4.6000% state sales tax rate.

623 676 727 773 817

683 742 797 847 895

722 784 841 895 946

751 815 875 931 983

775 841 903 960

1014

807 876 940

1000 1056

673 737 797 853 907

721 790 855 915 972

752 823 891 954

1014

775 848 918 983

1045

793 868 940

1006 1069

818 896 969

1038 1103

605 663 718 769 818

649 711 770 825 877

676 741 802 859 914

696 762 826 885 940

711 780 844 905 962

733 803 870 932 991

392 429 464 496 527

422 462 499 534 567

441 482 522 558 593

455 498 538 576 612

467 510 552 590 627

482 528 570 610 648

582 631 677 719 759

663 718 770 818 863

716 776 832 883 932

756 820 879 933 985

790 855 917 974

1028

835 905 970

1031 1087

875 954

1022 1091 1152

958 1044 1119 1193 1260

1012 1102 1181 1259 1330

1052 1146 1228 1309 1382

1085 1182 1266 1349 1424

1130 1230 1318 1405 1483

978 1075 1160 1245 1322

1048 1152 1244 1335 1418

1093 1202 1297 1392 1478

1126 1238 1336 1434 1523

1153 1267 1368 1468 1559

1189 1307 1411 1515 1608

882 971

1048 1126 1196

946 1041 1124 1207 1283

985 1084 1171 1258 1336

1014 1116 1206 1295 1376

1038 1142 1233 1325 1407

1069 1176 1270 1365 1450

568 623 672 721 765

611 671 723 776 823

638 701 756 811 860

659 724 780 837 888

675 742 800 858 910

698 767 827 887 941

811 882 944

1005 1060

923 1003 1073 1143 1205

996 1083 1159 1233 1301

1052 1144 1224 1303 1373

1098 1194 1277 1359 1433

1162 1263 1351 1438 1516

1455 1590 1677 1742 1795 1868 1707 1831 1909 1967 2014 2078 1548 1661 1730 1782 1822 1878 986 1061 1108 1144 1172 1212 1330 1511 1631 1722 1796 1900

498 539 578 614 648

532 576 618 656 692

559 605 649 689 727

580 629 674 715 755

611 661 709 752 794

584 638 689 736 781

637 695 751 803 852

670 732 791 845 897

696 760 821 877 930

716 782 845 903 958

744 813 877 938 995

692 752 805 857 903

740 804 860 915 965

776 844 902 960

1012

806 876 937 997

1051

848 921 985

1048 1105

840 922 993

1064 1128

916 1005 1083 1160 1230

965 1058 1140 1221 1294

1001 1098 1182 1267 1343

1030 1130 1217 1304 1382

1070 1174 1264 1354 1435

1132 1209 1268 1316 1383 1448 1578 1661 1723 1773 1841

555 601 643 682 719

645 698 747 792 835

706 763 817 866 913

753 814 871 924 974

792 856 917 972

1024

847 916 980

1039 1095

530 578 624 667 707

569 622 671 717 761

595 649 701 749 794

614 670 723 773 819

629 687 741 792 840

649 709 765 818 867

589 637 682 724 763

638 691 740 785 828

670 725 776 824 869

694 751 804 853 899

713 771 826 876 924

739 799 856 908 957

768 833 890 946 997

891 966

1032 1097 1155

974 1057 1128 1199 1263

1038 1127 1203 1278 1346

1092 1185 1265 1344 1415

1168 1266 1352 1437 1513

761 834 898 962

1019

818 896 965

1034 1095

854 936

1008 1079 1144

881 966

1040 1113 1180

903 989

1065 1141 1209

932 1022 1100 1178 1248

815 885 946

1006 1060

883 959

1025 1090 1148

927 1006 1075 1144 1205

959 1042 1113 1183 1247

986 1070 1143 1216 1281

1021 1109 1185 1259 1327

1245 1441 1574 1678 1764 1884 1306 1403 1465 1511 1548 1599 1325 1435 1505 1557 1599 1656

618 675 728 778 826

678 741 800 855 907

717 783 845 903 958

746 814 879 939 997

769 840 907 969

1027

800 874 944

1008 1070

535 578 619 657 692

623 674 721 765 806

682 738 790 837 882

728 787 842 893 941

766 828 886 940 990

819 885 947

1005 1058

883 956

1025 1088 1147

1010 1094 1172 1244 1311

1095 1185 1269 1347 1420

1160 1255 1345 1427 1504

1214 1313 1407 1492 1573

1289 1394 1493 1584 1670

669 731 789 844 895

744 812 877 937 994

791 864 933 997

1058

827 904 976

1043 1106

856 935

1010 1079 1145

896 979

1057 1130 1199

572 620 666 709 749

650 705 757 805 851

702 761 817 869 918

742 804 864 918 969

774 840 901 958

1012

820 889 954

1014 1071

888 973

1048 1123 1190

975 1069 1151 1233 1307

1030 1130 1216 1303 1381

1072 1175 1265 1355 1436

1105 1212 1305 1397 1481

1151 1261 1358 1455 1542

739 802 857 911 959

860 933 997

1060 1116

941 1021 1091 1159 1221

1004 1089 1163 1236 1302

1056 1146 1223 1300 1369

1129 1225 1308 1390 1463

1226 1332 1424 1516 1598

1400 1521 1626 1730 1823

1516 1647 1760 1873 1973

1606 1744 1864 1982 2089

1679 1824 1949 2073 2184

1782 1935 2067 2198 2316

963 1055 1137 1217 1291

1069 1173 1263 1353 1434

1138 1248 1344 1440 1526

1190 1305 1405 1506 1596

1232 1351 1455 1559 1652

1289 1414 1523 1631 1730

801 873 935 997

1053

910 991

1061 1131 1194

982 1069 1145 1220 1288

1037 1129 1209 1288 1360

1082 1178 1262 1344 1419

1145 1247 1335 1422 1501

1525 1675 1770 1841 1899 1977 1197 1392 1522 1623 1706 1823 2002 2282 2468 2611 2729 2893 1655 1839 1958 2047 2119 2219 1327 1504 1621 1711 1785 1887

391 425 456 485 512

410 445 477 508 536

421 457 491 522 551

430 466 500 532 562

436 473 508 540 570

445 483 518 551 582

388 419 449 476 501

439 474 507 537 566

472 510 545 578 609

498 538 575 609 641

519 561 599 635 668

549 592 633 670 705

686 752 814 872 927

755 827 895 959

1019

799 875 947

1014 1078

832 911 986

1056 1123

858 940

1018 1090 1159

895 981

1061 1137 1208

721 784 843 898 950

825 897 964

1027 1086

893 971

1044 1111 1175

945 1027 1105 1176 1244

988 1074 1155 1230 1300

1048 1139 1224 1304 1378

550 601 648 693 735

606 662 714 763 809

642 701 756 808 857

668 730 788 842 893

690 753 813 869 922

719 786 848 906 961

547 596 638 680 718

573 624 668 712 752

589 641 687 732 772

601 654 700 746 787

610 664 711 758 800

622 678 726 773 816

535 580 620 659 694

603 654 698 742 781

649 703 750 797 838

683 740 790 839 883

712 771 823 873 919

751 814 868 922 970

999 1099 1187 1274 1353

1099 1208 1304 1401 1487

1162 1278 1380 1482 1574

1210 1331 1437 1543 1639

1249 1374 1483 1593 1691

1303 1433 1547 1661 1764

1018 1110 1191 1271 1343

1163 1269 1361 1453 1535

1259 1374 1473 1572 1661

1333 1454 1559 1664 1758

1393 1520 1630 1739 1838

1477 1611 1728 1844 1948

790 866 932 998

1058

870 954

1027 1100 1166

922 1010 1088 1165 1235

960 1053 1133 1214 1286

991 1087 1170 1253 1328

1034 1133 1220 1306 1385

903 945 972 991 1006 1026 866 973 1043 1098 1142 1204 1750 1923 2035 2119 2187 2280 1700 1942 2102 2224 2325 2464 1355 1494 1582 1648 1701 1774

460 503 544 582 618

484 529 573 613 651

502 549 594 636 675

516 565 611 654 695

536 587 635 679 722

666 732 789 847 899

701 770 831 891 946

727 799 862 925 981

748 822 887 952

1010

777 854 921 988

1049

1159 1220 1265 1302 1352

5

4

The 4.0% rate for Hawaii is actually an excise tax but is treated as a sales tax for purpose of this deduction. Residents of Salem County should deduct only half of the amount in the state table.

A-12

2011 Optional Local Sales Tax Tables for Certain Local Jurisdictions (Based on a local sales tax rate of 1 percent)*

Income

At least

But less than

Exemptions

1 2 3 4 5 Over

5

$0 20,000 30,000 40,000

$20,000 30,000 40,000 50,000

50,000 60,000 70,000 80,000 90,000

60,000 70,000 80,000 90,000

100,000

100,000 120,000 140,000 160,000 180,000

120,000 140,000 160,000 180,000 200,000

200,000 or more

Local Table A Local Table B

Which Optional Local Sales Tax Table Should I Use? IF you live in the state of... AND you live in...

THEN use Local Table...

Alaska

Arizona

Arkansas

California

Colorado Adams County, Arapahoe County, Boulder County, Centennial, Colorado Springs, Denver City/Denver County, El Paso County, Jefferson County, Larimer County, Pueblo County, or any other locality

Any locality

Any locality

Los Angeles County

C

A

B

B

Georgia

B

Mesa or Tucson

Illinois

Louisiana One of the following parishes: Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Iberia, Jefferson, Lafayette, Lafourche, Livingston, Orleans, Ouachita, Rapides, St. Bernard, St. Landry, St. Tammany, Tangipahoa, or Terrebonne

New York

North Carolina Any locality

B

A

Any locality

C

A

Arvada, Aurora, City of Boulder, Fort Collins, Greeley, Lakewood, Longmont, City of Pueblo, or Westminster

A

Any locality

A

One of the following counties: Albany, Allegany, Broome, Cattaraugus, Cayuga, Chemung, Clinton, Cortland, Dutchess, Erie, Essex, Franklin, Fulton, Genesee, Herkimer, Jefferson, Lewis, Livingston, Monroe, Montgomery, Nassau, Niagara, Oneida, Onondaga, Ontario, Orange, Orleans, Oswego, Otsego, Putnam, Rensselaer, Rockland, St. Lawrence, Saratoga, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Suffolk, Sullivan, Tompkins, Ulster, Warren, Washington, Westchester, Wyoming, or Yates Or the City of Oneida

B

Any other locality D

41 64 75 85

46 71 84 94

49 76 89

100

51 79 93

105

53 82 96

109

55 86

101 114

50 76 89

100

58 88

103 116

63 96

112 126

67 102 119 134

71 107 125 140

75 114 133 149

94 101 109 115 122

104 112 120 128 135

110 119 128 136 143

115 125 134 142 150

119 129 138 147 155

125 135 145 154 162

110 119 127 135 142

127 137 146 155 163

138 149 159 168 177

147 158 169 179 188

154 166 177 187 197

164 176 188 199 210

130 141 151 161 170

144 156 167 178 188

153 166 178 189 199

160 174 186 197 208

165 180 192 204 215

173 188 201 214 225

151 164 175 185 195

174 188 200 213 224

189 204 218 231 243

200 217 231 245 258

210 227 242 257 270

223 241 257 273 287

213 235 249 260 269 282 242 278 301 319 334 355

Chandler, Gilbert, Glendale, Peoria, Phoenix, Scottsdale, Tempe, Yuma, or any other locality

Local Table C Local Table D

183 199 212 225 237

210 228 243 258 272

228 247 263 280 294

241 262 279 296 312

253 274 292 310 326

268 291 310 329 346

142 156 168 180 191

153 168 181 194 206

160 175 189 203 215

165 181 195 209 222

169 186 200 215 228

175 192 207 222 235

295 338 366 387 405 430 247 265 277 286 293 303

Exemptions

1 2 3 4 5 Over

5

Exemptions

1 2 3 4 5 Over

5

Exemptions

1 2 3 4 5 Over

5

Missouri

South Carolina

Charleston County or any other locality

Cherokee County, Chesterfield County, Darlington County, Dillon County, Horry County, Jasper County, Lee County, Lexington County, or Myrtle Beach

Tennessee Any locality

Utah Any locality

Virginia Any locality

B

B

B

A

A

133 144 154 163 172

153 165 177 187 197

166 179 192 203 214

176 190 203 215 227

184 199 213 225 237

196 211 226 239 252

60 92

108 121

69 106 124 139

75 115 135 151

80 122 143 161

84 128 150 168

89 136 159 179

98 107 116 124 132

106 116 125 134 142

110 121 131 140 148

114 125 135 144 153

117 128 138 148 157

121 132 143 153 162

39 64 77 88

42 69 83 95

46 76 91

105

48 79 95

108

Any locality

B

44 72 86 99

45 74 89

102

Any other locality

Chautauqua County, Chenango County, Columbia County, Delaware County, Greene County, Hamilton County, Madison County, Tioga County, Wayne County, New York City, or Norwich City

B

A

*If your local rate is different from 1 percent, the local portion of your deduction for sales tax will be proportionally larger or smaller. See the instructions for line 3 of the State and Local General Sales Tax Deduction Worksheet.

Thornton C

A-13

Internal Revenue Service

2011 Instructions for Schedule C Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if yourProfit or Loss primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby doesFrom Business not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21.

Also use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of certain qualified joint ventures, and (c) certain income shown on Form 1099-K, Merchant Card and Third Party Network Payments, and Form 1099-MISC, Miscellaneous Income. See the instructions for line 1 and the Instructions for Recipient (back of Copy B of Form 1099-MISC) for the types of income to report on Sched- ule C.

Small businesses and statutory employees with business expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ for details.

You may be subject to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information.

trade or business or income-producingto determine whether you are required to property.file any Forms 1099.

• Form 4797 to report sales, exchanges, Heavy highway vehicle use tax. This tax and involuntary conversions (not from a has been extended through September 30, casualty or theft) of trade or business prop- 2012. See Form 2290 and its instructionsWhat’s New erty. for the extended filing deadline for 2011. • Form 6198 to figure your allowableFuture developments. For the latest infor-

loss if you have a business loss and youMusical composition expenses. You maymation about this form, including any de- have amounts invested in the business forno longer elect to amortize certain expensesvelopments after these instructions were which you are not at risk.paid or incurred to create or acquire a musi-released, go to www.irs.gov/schedulec. • Form 8582 to figure your deductiblecal composition or its copyright.

New merchant card reporting require- loss from passive activities. ments. We added new lines 1a and 1b to • Form 8594 to report certain purchases implement reporting of gross receipts re- or sales of groups of assets that constitute a ceived via merchant card (credit and debit trade or business.General Instructions cards) and third party network payments. • Form 8824 to report like-kind ex- However, for 2011, the IRS has deferred changes.Other Schedules and Formsthe requirement to report these amounts. • Form 8829 to claim expenses for busi-You May Have To FileTherefore, enter zero on line 1a and report ness use of your home.• Schedule A to deduct interest, taxes,all gross receipts on line 1b, including any • Form 8903 to take a deduction for in-and casualty losses not related to your busi-income reported to you on Form 1099-K, come from domestic production activities.ness.Merchant Card and Third Party Network

Single-member limited liability company• Schedule E to report rental real estatePayments (but excluding any W-2 income (LLC). Generally, a single-member do-and royalty income or (loss) that is not sub-reportable on line 1c). mestic LLC is not treated as a separate en-ject to self-employment tax. tity for federal income tax purposes. If youQualified joint ventures reporting rental • Schedule F to report profit or (loss) are the sole member of a domestic LLC,real estate income. Beginning in 2011, from farming. file Schedule C or C-EZ (or Schedule E orqualified joint ventures reporting rental real • Schedule J to figure your tax by aver- F, if applicable). However, you can elect toestate income that is not subject to self-em- aging your farming or fishing income over treat a domestic LLC as a corporation. Seeployment tax must report that income on the previous 3 years. Doing so may reduce Form 8832 for details on the election and

Schedule E instead of Schedule C. See your tax. the tax treatment of a foreign LLC. Husband-Wife Qualified Joint Venture and • Schedule SE to pay self-employment the Instructions for Schedule E for details. Single-member limited liability companiestax on income from any trade or business.

(LLCs) with employees. Single-member• Form 3800 to claim any of the generalStandard mileage rate. The business stan- LLCs that are disregarded as entities sepa-business credits.dard mileage rate for 2011 increased to 51 rate from their owner for federal income• Form 4562 to claim depreciation (in-cents per mile for miles driven before July tax purposes are now required to file em- cluding the special allowance) on assets1, 2011, and 55.5 cents per mile for miles ployment tax returns using the LLC’s name placed in service in 2011, to claim amorti-driven after June 30, 2011. See the instruc- and employer identification number (EIN) zation that began in 2011, to make an elec- rather than the LLC owner’s name andtions for line 9 for details. tion under section 179 to expense certain EIN. Single-member LLCs not previously

Information reporting requirements. New property, or to report information on listed needing an EIN may now need to obtain an property.lines I and J address your required filing of EIN for the payment and reporting of those

Forms 1099 in 2011. See the General In- • Form 4684 to report a casualty or theft taxes. For more information, see the In- structions for Certain Information Returns gain or loss involving property used in your structions for Form SS-4.

C-1 Cat. No. 24329WNov 07, 2011

Heavy highway vehicle use tax. If you use ployer identification number (EIN) since • Certain transactions resulting in a loss certain highway trucks, truck-trailers, you and your spouse will file as sole propri- of at least $2 million in any single tax year tractor-trailers, or buses in your trade or etors. However, you may need an EIN to or $4 million in any combination of tax business, you may have to pay a federal file other returns such as employment or years. (At least $50,000 for a single tax highway motor vehicle use tax. See the In- excise tax returns. To apply for an EIN, see year if the loss arose from a foreign cur- structions for Form 2290 to find out if you the Instructions for Form SS-4. rency transaction defined in section must pay this tax and visit www.irs.gov/ 988(c)(1), whether or not the loss flowsFor more information on qualified jointtrucker for the most recent developments. through from an S corporation or partner-ventures, go to IRS.gov. Enter “qualified ship.)Information returns. You may have to file joint venture” in the search box and select • Certain transactions of interest en-information returns for wages paid to em- “Election for Husband and Wife Unincorp-

tered into after November 1, 2006, that areployees, certain payments of fees and other orated Businesses.” the same or substantially similar to one ofnonemployee compensation, interest, rents, the types of transactions that the IRS hasRental real estate business. If you androyalties, real estate transactions, annuities, identified by published guidance as a trans-your spouse make the election for yourand pensions. See the instructions for line I action of interest.rental real estate business, you must eachand the 2011 General Instructions for Cer-

report your share of income and deductionstain Information Returns for details and See the Instructions for Form 8886 for on Schedule E. Rental real estate incomeother payments that may require you to file more details. generally is not included in net earningsa Form 1099. from self-employment subject to self-em- Capital Construction FundIf you received cash of more than ployment tax and generally is subject to the

$10,000 in one or more related transactions Do not claim on Schedule C or C-EZ thepassive loss limitation rules. Electing quali- in your trade or business, you may have to deduction for amounts contributed to a cap-fied joint venture status does not alter the file Form 8300. For details, see Pub. 1544. ital construction fund set up under chapterapplication of the self-employment tax or

535 of title 46 of the United States Code.the passive loss limitation rules.Husband-Wife Instead, reduce the amount you would oth- Exception—Community Income erwise enter on Form 1040, line 43, by theQualified Joint Venture

amount of the deduction. Next to line 43,If you and your spouse wholly own an un-If you and your spouse each materially par- enter “CCF” and the amount of the deduc-incorporated business as community prop-ticipate (see Material participation, later, in tion. For details, see Pub. 595.erty under the community property laws ofthe instructions for line G) as the only a state, foreign country, or U.S. possession,members of a jointly owned and operated Additional Informationthe income and deductions are reported asbusiness and you file a joint return for the

See Pub. 334 for more information forfollows.tax year, you can make an election to be small businesses.taxed as a qualified joint venture instead of • If only one spouse participates in the

a partnership. This election, in most cases, business, all of the income from that busi- will not increase the total tax owed on the ness is the self-employment earnings of the joint return, but it does give each of you spouse who carried on the business. Specific Instructionscredit for social security earnings on which • If both spouses participate, the incomeretirement benefits are based and for Medi- and deductions are allocated to the spouses Filers of Form 1041. Do not complete thecare coverage. By making the election, you based on their distributive shares. block labeled “Social security numberwill not be required to file Form 1065 for • If either or both you and your spouse (SSN).” Instead, enter the employer identi-any year the election is in effect and will

are partners in a partnership, see Pub. 541. fication number (EIN) issued to the estateinstead report the income and deductions or trust on line D.• If you and your spouse elected to treatdirectly on your joint return. If you and

the business as a qualifying joint venture,your spouse filed a Form 1065 for the year see Husband-Wife Qualified Joint Ventureprior to the election, the partnership termi- on this page.nates at the end of the tax year immediately Line Apreceding the year the election takes effect. The only states with community prop- Describe the business or professional activ- erty laws are Arizona, California, Idaho,Note. Mere joint ownership of property ity that provided your principal source of Louisiana, Nevada, New Mexico, Texas,that is not a trade or business does not qual- income reported on line 1b-d. If you owned Washington, and Wisconsin. A change inify for the election. more than one business, you must complete your reporting position will be treated as a a separate Schedule C for each business.Making the election. To make this elec- conversion of the entity. Give the general field or activity and thetion, you must divide all items of income, type of product or service. If your generalgain, loss, deduction, and credit attributable Reportable Transaction field or activity is wholesale or retail trade,to the business between you and your or services connected with production serv-Disclosure Statementspouse in accordance with your respective ices (mining, construction, or manufactur-Use Form 8886 to disclose information forinterests in the venture. Each of you must ing), also give the type of customer oreach reportable transaction in which youfile a separate Schedule C, C-EZ, or F. On client. For example, “wholesale sale ofparticipated. Form 8886 must be filed foreach line of your separate Schedule C, hardware to retailers” or “appraisal of realeach tax year that your federal income taxC-EZ, or F, you must enter your share of estate for lending institutions.”liability is affected by your participation inthe applicable income, deduction, or loss. the transaction. You may have to pay a pen-Each of you must also file a separate alty if you are required to file Form 8886Schedule SE to pay self-employment tax, but do not do so. You may also have to payas applicable. Line D interest and penalties on any reportableOnce made, the election can be revoked Enter on line D the employer identificationtransaction understatements. The followingonly with the permission of the IRS. How- number (EIN) that was issued to you onare reportable transactions.ever, the election technically remains in ef- Form SS-4. Do not enter your SSN. Do not• Any listed transaction that is the samefect only for as long as the spouses filing as enter another taxpayer’s EIN (for example, as or substantially similar to tax avoidancea qualified joint venture continue to meet from any Forms 1099-MISC that you re- transactions identified by the IRS.the requirements for filing the election. If ceived). If you do not have an EIN, leave

the spouses fail to meet the qualified joint line D blank.• Any transaction offered to you or a re- venture requirements for a year, a new elec- lated party under conditions of confidenti- You need an EIN only if you have ation will be necessary for any future year in ality for which you paid an advisor a fee of qualified retirement plan or are required to which the spouses meet the requirements to at least $50,000. file employment, excise, alcohol, tobacco, be treated as a qualified joint venture. • Certain transactions for which you or or firearms returns, or are a payer of gam-

The election generally does not require a related party have contractual protection bling winnings. If you need an EIN, See the that you and your spouse obtain an em- against disallowance of the tax benefits. Instructions for Form SS-4.

C-2

Single-member LLCs. If you are the sole method and must make a section 481(a) ad- eration of this trade or business activity owner of an LLC that is not treated as a justment to prevent duplication of income. during 2011 if you met any of the following separate entity for federal income tax pur- seven tests.A net negative section 481(a) adjust- poses, you may have an EIN that was is- ment is taken into account entirely in the 1. You participated in the activity forsued to the LLC (and in the LLC’s legal year of the change. A net positive section more than 500 hours during the tax year.name) if you are required to file employ- 481(a) adjustment is generally taken into 2. Your participation in the activity forment tax returns and certain excise tax re- account over a period of 4 years. Include the tax year was substantially all of the par-turns. However, you should enter on line any net positive section 481(a) adjustments ticipation in the activity of all individualsD only the EIN issued to you and in your on line 6. If the net section 481(a) adjust- (including individuals who did not own anyname as a sole proprietor. If you do not ment is negative, report it in Part V. interest in the activity) for the tax year.have such an EIN, leave line D blank. Do

For details on figuring section 481(a)not enter on line D the EIN issued to the 3. You participated in the activity for adjustments, see the Instructions for FormLLC. more than 100 hours during the tax year, 3115, and Rev. Proc. 2006-12, 2006-3 and you participated at least as much as any I.R.B. 310, available at other person for the tax year. This includes www.irs.gov/irb/2006-03_IRB/ar14.html. individuals who did not own any interest inLine E Also see Rev. Proc. 2006-37, 2006-38 the activity. I.R.B. 499, available atEnter your business address. Show a street 4. The activity is a significant partici-www.irs.gov/irb/2006-38_IRB/ar10.html.address instead of a box number. Include pation activity for the tax year, and you par-

the suite or room number, if any. If you ticipated in all significant participation conducted the business from your home lo- activities for more than 500 hours during cated at the address shown on Form 1040, the year. An activity is a “significant par-Line G page 1, you do not have to complete this ticipation activity” if it involves the con-

If your business activity was not a rentalline. duct of a trade or business, you participated activity and you met any of the material in the activity for more than 100 hours dur- participation tests, explained next, or the ing the tax year, and you did not materially exception for oil and gas applies (explained participate under any of the material par-Line F later), check the “Yes” box. Otherwise, ticipation tests (other than this test 4). check the “No” box. If you check the “No”Generally, you can use the cash method, 5. You materially participated in the ac-box, this business is a passive activity. Ifaccrual method, or any other method per- tivity for any 5 of the prior 10 tax years.you have a loss from this business, seemitted by the Internal Revenue Code. In all 6. The activity is a personal service ac-Limit on losses, later. If you have a profitcases, the method used must clearly reflect tivity in which you materially participatedfrom this business activity but have currentincome. Unless you are a qualifying tax- for any 3 prior tax years. A personal serviceyear losses from other passive activities orpayer or a qualifying small business tax- activity is an activity that involves perform-you have prior year unallowed passive ac-payer (see the Part III instructions), you ing personal services in the fields of health,tivity losses, see the Instructions for Formmust use the accrual method for sales and law, engineering, architecture, accounting,8582.purchases of inventory items. Special rules actuarial science, performing arts, consult-

apply to long-term contracts (see Code sec- Material participation. For purposes of ing, or any other trade or business in which tion 460 for details). the seven material participation tests listed capital is not a material income-producing

below, participation generally includes any factor.If you use the cash method, show all work you did in connection with an activity 7. Based on all the facts and circum-items of taxable income actually or con- if you owned an interest in the activity at stances, you participated in the activity on astructively received during the year (in the time you did the work. The capacity in regular, continuous, and substantial basiscash, property, or services). Income is con- which you did the work does not matter. for more than 100 hours during the taxstructively received when it is credited to However, work is not treated as partici- year. Your participation in managing theyour account or set aside for you to use. pation if it is work that an owner would not activity does not count in determining ifAlso, show amounts actually paid during customarily do in the same type of activity you meet this test if any person (exceptthe year for deductible expenses. However, and one of your main reasons for doing the you) (a) received compensation for per-if the payment of an expenditure creates an work was to avoid the disallowance of forming management services in connec-asset having a useful life that extends sub- losses or credits from the activity under the tion with the activity, or (b) spent morestantially beyond the close of the year, it passive activity rules. hours during the tax year than you spentmay not be deductible or may be deductible Work you did as an investor in an activ- performing management services in con-only in part for the year of the payment. See

ity is not treated as participation unless you nection with the activity (regardless ofchapter 1 of Pub. 535. were directly involved in the day-to-day whether the person was compensated for management or operations of the activity.If you use the accrual method, report in- the services). Work done as an investor includes:come when you earn it and deduct expenses

when you incur them even if you do not pay • Studying and reviewing financial Rental of property. Generally, a rental ac-them during the tax year. Accrual-basis statements or reports on the activity, tivity (such as long-term equipment leasingtaxpayers are put on a cash basis for de- • Preparing or compiling summaries or or rental real estate) is a passive activityducting business expenses owed to a re- analyses of the finances or operations of the even if you materially participated in thelated cash-basis taxpayer. Other rules activity for your own use, and activity. However, if you materially partici-determine the timing of deductions based pated in a rental real estate activity as a real• Monitoring the finances or operationson economic performance. See Pub. 538. estate professional, it is not a passive activ-of the activity in a nonmanagerial capacity. ity. Also, if you met any of the five excep-To change your accounting method, you Participation by your spouse during the tions listed under Rental Activities in thegenerally must file Form 3115. You also tax year in an activity you own can be Instructions for Form 8582, the rental of themay have to make an adjustment to prevent counted as your participation in the activ- property is not treated as a rental activityamounts of income or expense from being ity. This rule applies even if your spouse and the material participation rules aboveduplicated or omitted. This is called a sec- did not own an interest in the activity and apply. See Activities That Are Not Passivetion 481(a) adjustment. whether or not you and your spouse file a Activities in the Instructions for Form 8582joint return. However, this rule does not ap-Example. You change to the cash for the definition of a real estate profes-ply for purposes of determining whethermethod of accounting and choose to ac- sional.you and your spouse can elect to have yourcount for inventoriable items in the same

business treated as a qualified joint venture Exception for oil and gas. If you are filingmanner as materials and supplies that are instead of a partnership (see Husband-Wife Schedule C to report income and deduc-not incidental. You accrued sales in 2010 Qualified Joint Venture, earlier). tions from an oil or gas well in which youfor which you received payment in 2011.

own a working interest directly or throughYou must report those sales in both years as For purposes of the passive activity an entity that does not limit your liability,a result of changing your accounting rules, you materially participated in the op-

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check the “Yes” box. The activity of own- you should receive a Form 1099-K for Line 1d. Since line 1a is zero, enter on line ing a working interest is not a passive activ- those payments. These payments should 1d the amount from line 1b or 1c. ity, regardless of your participation. have been reported to you in box 1 of Form

1099-K, Merchant Card and Third PartyLimit on losses. Your loss may be limited Network Payments. Merchant cards in-if you checked the “No” box on line G. In Line 6

this case, you may have a loss from a pas- clude, but are not limited to, Visa and Mas- Report on line 6 amounts from finance re-sive activity, and you may have to use terCard. Third party networks include, but serve income, scrap sales, bad debts youForm 8582 to figure your allowable loss, if are not limited to, PayPal and Google recovered, interest (such as on notes andany, to enter on Schedule C, line 31. Checkout. For 2011, you are not required to accounts receivable), state gasoline or fuel

report income received via merchant cardGenerally, you can deduct losses from tax refunds you received in 2011, credit for passive activities only to the extent of in- or third party network payers, so enter zero biodiesel and renewable diesel fuels come from passive activities. For details, on line 1a and report all income, regardless claimed on line 8 of Form 8864, credit for see Pub. 925. of how it was received, on line 1b. alcohol and cellulosic biofuel fuels claimed

on line 7 of Form 6478, credit for federal Line 1b. Enter on line 1b all gross receipts tax paid on fuels claimed on your 2010 from your trade or business. Also include Form 1040, prizes and awards related toLine H amounts you received in your trade or busi- your trade or business, and other kinds of

If you started or acquired this business in ness that were properly shown on Forms miscellaneous business income. Include 2011, check the box on line H. Also check amounts you received in your trade or busi-1099-MISC. If the total amounts that were the box if you are reopening or restarting ness as shown on Form 1099-PATR.reported in box 7 of Forms 1099-MISC are this business after temporarily closing it, more than the total you are reporting on this If the business use percentage of anyand you did not file a 2010 Schedule C or

line, attach a statement explaining the dif- listed property (defined in the instructionsC-EZ for this business. ference. for line 13) dropped to 50% or less in 2011,

report on this line any recapture of excess Line 1c. If you received a Form W-2 and depreciation, including any section 179 ex- the “Statutory employee” box in box 13 of pense deduction. Use Part IV of Form 4797Line I that form was checked, report your income to figure the recapture. Also, if the businessIf you made any payment in 2011 that use percentage drops to 50% or less onand expenses related to that income on

would require you to file any Forms 1099, leased listed property (other than a vehi-Schedule C or C-EZ. Enter your statutory check the “Yes” box. Otherwise, check the cle), include on this line any inclusionemployee income from box 1 of Form W-2 “No” box. amount. See chapter 5 of Pub. 946 to figureon this line. Social security and Medicare

the amount.You may have to file information re- tax should have been withheld from your turns for wages paid to employees, certain earnings; as a result, you do not owe payments of fees and other non-employee self-employment tax on these earnings. compensation, interest, rents, royalties, real Statutory employees include full-time life Part II. Expensesestate transactions, annuities, and pensions. insurance agents, certain agent or commis- You may also have to file an information sion drivers and traveling salespersons, and Capitalizing costs of property. If you pro- return if you sold $5,000 or more of con- certain homeworkers. duced real or tangible personal property or

acquired property for resale, certain ex-sumer products to a person on a buy-sell, If you had both self-employment in- penses attributable to the property gener-deposit-commission, or other similar basis

come and statutory employee income, you ally must be included in inventory costs orfor resale. must file two Schedules C. You cannot use capitalized. In addition to direct costs, pro-

On page 15 of the General In- Schedule C-EZ or combine these amounts ducers of inventory property generally must also include part of certain indirectstructions for Certain Informa- on a single Schedule C. costs in their inventory. Purchasers of per-tion Returns, you can find a

TIP Qualified joint ventures should sonal property acquired for resale must in-chart showing which Forms

clude part of certain indirect costs inreport rental real estate income1099 must be filed, the amounts to report, inventory only if the average annual grossnot subject to self-employmentand the due dates for the required Forms receipts for the 3 prior tax years exceed $10tax on Schedule E. See1099. million. Also, you must capitalize part ofHusband-Wife Qualified Joint Venture, the indirect costs that benefit real or tangi-earlier, and the Instructions for Schedule E. ble personal property constructed for use in a trade or business, or noninventory prop-Installment sales. Generally, the install-Part I. Income erty produced for sale to customers. Re-ment method cannot be used to report in-Except as otherwise provided in the Inter- duce the amounts on lines 8 through 26 andcome from the sale of (a) personal propertynal Revenue Code, gross income includes Part V by amounts capitalized. See Pub.regularly sold under the installmentincome from whatever source derived. In 538 for a discussion of uniform capitaliza-method, or (b) real property held for resalecertain circumstances, however, gross in- tion rules.

to customers. But the installment methodcome does not include extraterritorial in- Exception for certain producers. Pro-can be used to report income from sales ofcome that is qualifying foreign trade ducers who account for inventoriable itemsincome. Use Form 8873 to figure the extra- certain residential lots and timeshares if in the same manner as materials and sup-territorial income exclusion. Report it on you elect to pay interest on the tax due on plies that are not incidental can currentlySchedule C as explained in the Instructions that income after the year of sale. See sec- deduct expenditures for direct labor and allfor Form 8873. tion 453(l)(2)(B) for details. If you make indirect costs that would otherwise be in- If you were a debtor in a chapter 11 this election, include the interest in the total cluded in inventory costs. See Part III. Cost

bankruptcy case during 2011, see Chapter on Form 1040, line 61. Also, enter of Goods Sold for more details. 11 Bankruptcy Cases under Income in the “453(l)(3)” and the amount of the interest Exception for creative property. If youinstructions for Form 1040 and the Instruc- on the dotted line to the left of line 61. are a freelance artist, author, or photogra-tions for Schedule SE (Form 1040). pher, you may be exempt from the capitali-If you use the installment method, at- zation rules. However, your personaltach a schedule to your return. Show sepa- efforts must have created (or reasonably be

rately for 2011 and the 3 preceding years: expected to create) the property. This ex-Line 1 gross sales, cost of goods sold, gross profit, ception does not apply to any expense re- Enter gross receipts from your trade or percentage of gross profit to gross sales, lated to printing, photographic plates, business. If you received merchant card amounts collected, and gross profit on motion picture films, video tapes, or similar and third party network payments in 2011, amounts collected. items. These expenses are subject to the

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Page 5 of 11 of 2011 Instructions for Schedule C 11:57 - 6-DEC-2011

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

capitalization rules. For details, see Uni- wages paid to your employees; instead, see lar business establishment only if that por- form Capitalization Rules in Pub. 538. line 26. tion meets the requirements under section

280A(c)(1) for deducting expenses for theYou must file Form 1099-MISC, Mis- business use of your home.cellaneous Income, to report contract labor payments of $600 or more during the year. See the instructions for line 6 if the busi-Line 9 See the Instructions for Form 1099-MISC ness use percentage of any listed property

You can deduct the actual expenses of op- for details. dropped to 50% or less in 2011. erating your car or truck or take the stan- dard mileage rate. This is true even if you used your vehicle for hire (such as a taxi- cab). You must use actual expenses if you Line 12 Line 14 used five or more vehicles simultaneously Enter your deduction for depletion on this Deduct contributions to employee benefitin your business (such as in fleet opera- line. If you have timber depletion, attach programs that are not an incidental part of ations). You cannot use actual expenses for a Form T. See chapter 9 of Pub. 535 for de- pension or profit-sharing plan included onleased vehicle if you previously used the tails. line 19. Examples are accident and healthstandard mileage rate for that vehicle. plans, group-term life insurance, and de-

pendent care assistance programs. If youYou can take the standard mileage rate made contributions on your behalf as afor 2011 only if you: Line 13 self-employed person to a dependent care• Owned the vehicle and used the stan- assistance program, complete Form 2441,Depreciation and section 179 expense de-dard mileage rate for the first year you Parts I and III, to figure your deductibleduction. Depreciation is the annual deduc-placed the vehicle in service, or contributions to that program.tion allowed to recover the cost or other• Leased the vehicle and are using the basis of business or investment property You cannot deduct contributions youstandard mileage rate for the entire lease having a useful life substantially beyond made on your behalf as a self-employedperiod (except the period, if any, before the tax year. You can also depreciate im- person for group-term life insurance.1998). provements made to leased business prop-

Do not include on line 14 any contribu-erty. However, stock in trade, inventories,If you take the standard mileage rate: tions you made on your behalf as a self-em-and land are not depreciable. Depreciation

• Multiply the number of business miles ployed person to an accident and healthstarts when you first use the property in driven by 51 cents for miles driven before plan. However, you may be able to deductyour business or for the production of in- July 1, 2011, and 55.5 cents per mile for on Form 1040, line 29, or Form 1040NR,come. It ends when you take the property miles driven after June 30, 2011, and line 29, the amount you paid for healthout of service, deduct all your depreciable

insurance on behalf of yourself, yourcost or other basis, or no longer use the• Add to this amount your parking fees spouse, and dependents, even if you do notproperty in your business or for the produc-and tolls, and enter the total on line 9. itemize your deductions. See the instruc-tion of income. You can also elect under

Do not deduct depreciation, rent or lease tions for Form 1040, line 29, or Formsection 179 to expense part or all of the cost payments, or your actual operating ex- 1040NR, line 29, for details.of certain property you bought in 2011 for penses. use in your business. See the Instructions You must reduce your line 14 deductionfor Form 4562 and Pub. 946 to figure theIf you deduct actual expenses: by the amount of any credit for small em-amount to enter on line 13. ployer health insurance premiums deter-• Include on line 9 the business portion

mined on Form 8941. See Form 8941 andWhen to attach Form 4562. You mustof expenses for gasoline, oil, repairs, insur- its instructions to determine which ex-complete and attach Form 4562 only if youance, tires, license plates, etc., and penses are eligible for the credit.are claiming:• Show depreciation on line 13 and rent

• Depreciation on property placed inor lease payments on line 20a. service during 2011;For details, see chapter 4 of Pub. 463. • Depreciation on listed property (de- Line 15 fined below), regardless of the date it wasInformation on your vehicle. If you claim Deduct premiums paid for business insur-placed in service; orany car and truck expenses, you must pro- ance on line 15. Deduct on line 14 amountsvide certain information on the use of your • A section 179 expense deduction. paid for employee accident and health in-vehicle by completing one of the following. surance. Do not deduct amounts credited toIf you acquired depreciable property for• Schedule C, Part IV, or Schedule a reserve for self-insurance or premiumsthe first time in 2011, see Pub. 946.

C-EZ, Part III, if: (a) you are claiming the paid for a policy that pays for your lost Listed property generally includes but isstandard mileage rate, you lease your vehi- earnings due to sickness or disability. For

not limited to:cle, or your vehicle is fully depreciated, and details, see chapter 6 of Pub. 535. (b) you are not required to file Form 4562 • Passenger automobiles weighing for any other reason. If you used more than 6,000 pounds or less; one vehicle during the year, attach your • Any other property used for transpor- Lines 16a and 16bown schedule with the information re- tation if the nature of the property lends quested in Schedule C, Part IV, or Schedule itself to personal use, such as motorcycles, Interest allocation rules. The tax treatment C-EZ, Part III, for each additional vehicle. pickup trucks, etc.; of interest expense differs depending on its

• Form 4562, Part V, if you are claim- type. For example, home mortgage interest• Any property used for entertainment ing depreciation on your vehicle or you are and investment interest are treated differ-or recreational purposes (such as photo- required to file Form 4562 for any other ently. “Interest allocation” rules requiregraphic, phonographic, communication, reason (see the instructions for line 13). you to allocate (classify) your interest ex-and video recording equipment); and

pense so it is deducted (or capitalized) on• Computers or peripheral equipment. the correct line of your return and receives Exceptions. Listed property does not in- the right tax treatment. These rules couldLine 11 clude photographic, phonographic, com- affect how much interest you are allowed to

Enter the total cost of contract labor for the munication, or video equipment used deduct on Schedule C or C-EZ. tax year. Contract labor includes payments exclusively in your trade or business or at Generally, you allocate interest expenseto persons you do not treat as employees your regular business establishment. It also by tracing how the proceeds of the loan(for example, independent contractors) for does not include any computer or periph- were used. See chapter 4 of Pub. 535 forservices performed for your trade or busi- eral equipment used exclusively at a regu- details.ness. Do not include contract labor de- lar business establishment and owned or ducted elsewhere on your return, such as leased by the person operating the estab- If you paid interest on a debt secured by contract labor includible on line 17, 21, 26, lishment. For purposes of these exceptions, your main home and any of the proceeds or 37. Also, do not include salaries and a portion of your home is treated as a regu- from that debt were used in connection

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with your trade or business, see chapter 4 of Form 5500-EZ. File this form if you have local governments. But some licenses, such Pub. 535 to figure the amount that is de- a one-participant retirement plan that meets as liquor licenses, may have to be amor- ductible on Schedule C or C-EZ. certain requirements. A one-participant tized. See chapter 8 of Pub. 535 for details.

plan is a plan that covers only you (or you • Social security and Medicare taxesHow to report. If you have a mortgage on and your spouse). paid to match required withholding fromreal property used in your business (other your employees’ wages. Reduce your de-than your main home), enter on line 16a the Form 5500-SF. File this form if you have a duction by the amount shown on Forminterest you paid for 2011 to banks or other small plan (fewer than 100 participants in 8846, line 4.financial institutions for which you re- most cases) that meets certain require-

• Federal unemployment tax paid.ceived a Form 1098 (or similar statement). ments. If you did not receive a Form 1098, enter • Federal highway use tax.Form 5500. File this form for a plan thatthe interest on line 16b. • Contributions to state unemploymentdoes not meet the requirements for filing

If you paid more mortgage interest than insurance fund or disability benefit fund ifForm 5500-EZ or Form 5500-SF. is shown on Form 1098, see chapter 4 of they are considered taxes under state law.For details, see Pub. 560.Pub. 535 to find out if you can deduct the

Do not deduct the following.additional interest. If you can, include the • Federal income taxes, including youramount on line 16a. Attach a statement to

self-employment tax. However, you canyour return explaining the difference and Lines 20a and 20b deduct a portion of your self-employmententer “See attached” in the margin next to

If you rented or leased vehicles, machinery, tax on Form 1040, line 27, (or Formline 16a. or equipment, enter on line 20a the business 1040NR, line 27, when covered under theIf you and at least one other person portion of your rental cost. But if you U.S. social security system due to an inter-(other than your spouse if you file a joint leased a vehicle for a term of 30 days or national social security agreement).return) were liable for and paid interest on more, you may have to reduce your deduc- • Estate and gift taxes.the mortgage and the other person received tion by an amount called the inclusion • Taxes assessed to pay for improve-the Form 1098, include your share of the amount. See Leasing a Car in chapter 4 of

ments, such as paving and sewers.interest on line 16b. Attach a statement to Pub. 463 to figure this amount. your return showing the name and address • Taxes on your home or personal useEnter on line 20b amounts paid to rentof the person who received the Form 1098. property.or lease other property, such as office spaceIn the margin next to line 16b, enter “See • State and local sales taxes on propertyin a building.attached.” purchased for use in your business. Instead,

If you paid interest in 2011 that also treat these taxes as part of the cost of the applies to future years, deduct only the part property. that applies to 2011. Line 21 • State and local sales taxes imposed on

the buyer that you were required to collectDeduct the cost of incidental repairs and and pay over to state or local governments.maintenance that do not add to the These taxes are not included in gross re-property’s value or appreciably prolong itsLine 17 ceipts or sales nor are they a deductiblelife. Do not deduct the value of your own

Include on this line fees charged by ac- expense. However, if the state or local gov-labor. Do not deduct amounts spent to re- countants and attorneys that are ordinary ernment allowed you to retain any part ofstore or replace property; they must be cap- and necessary expenses directly related to the sales tax you collected, you must in-italized. operating your business. clude that amount as income on line 6.

Include fees for tax advice related to • Other taxes and license fees not re- your business and for preparation of the tax lated to your business.Line 22forms related to your business. Also in- clude expenses incurred in resolving as- In most cases, you can deduct the cost of serted tax deficiencies relating to your materials and supplies only to the extent Line 24abusiness. you actually consumed and used them in

your business during the tax year (unless Enter your expenses for lodging and trans-For more information, see Pub. 334 or you deducted them in a prior tax year). portation connected with overnight travel535. However, if you had incidental materials for business while away from your tax and supplies on hand for which you kept no home. In most cases, your tax home is your inventories or records of use, you can de- main place of business, regardless of where duct the cost of those you actually pur-Line 18 you maintain your family home. You can- chased during the tax year, provided that not deduct expenses paid or incurred inInclude on this line your expenses for method clearly reflects income. connection with employment away fromoffice supplies and postage. home if that period of employment exceedsYou can also deduct the cost of books,

1 year. Also, you cannot deduct travel ex-professional instruments, equipment, etc., penses for your spouse, your dependent, orif you normally use them within a year. any other individual unless that person isHowever, if their usefulness extends sub-Line 19 your employee, the travel is for a bona fidestantially beyond a year, you must gener-Enter your deduction for contributions to a business purpose, and the expenses wouldally recover their costs throughpension, profit-sharing, or annuity plan, or otherwise be deductible by that person.depreciation.plan for the benefit of your employees. If

Do not include expenses for meals andthe plan included you as a self-employed entertainment on this line. Instead, see theperson, enter contributions made as an em- instructions for line 24b.ployer on your behalf on Form 1040, line Line 23

28, or Form 1040NR, line 28, not on Instead of keeping records of your ac-You can deduct the following taxes andSchedule C. tual incidental expenses, you can use anlicenses on this line. In most cases, you must file the applica- optional method for deducting incidental• State and local sales taxes imposed onble form listed below if you maintain a expenses only if you did not pay or incuryou as the seller of goods or services. If youpension, profit-sharing, or other funded-de- meal expenses on a day you were travelingcollected this tax from the buyer, you mustferred compensation plan. The filing re- away from your tax home. The amount ofalso include the amount collected in grossquirement is not affected by whether or not the deduction is $5 a day. Incidental ex-receipts or sales on line 1.the plan qualified under the Internal Reve- penses include fees and tips given to por-• Real estate and personal propertynue Code, or whether or not you claim a ters, baggage carriers, bellhops, hotel

taxes on business assets.deduction for the current tax year. There is maids, stewards or stewardesses and others a penalty for failure to timely file these • Licenses and regulatory fees for your on ships, and hotel servants in foreign forms. trade or business paid each year to state or countries. They do not include expenses for

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laundry, cleaning and pressing of clothing, See chapter 1 of Pub. 463 for details on • Form 8932, Credit for Employer Dif- lodging taxes, or the costs of telegrams or how to figure your deduction using the ferential Wage Payments, line 2. telephone calls. You cannot use this standard meal allowance, including special

If you provided taxable fringemethod on any day that you use the stan- rules for partial days of travel. benefits to your employees,dard meal allowance (as explained in the

Amount of deduction. In most cases, you such as personal use of a car, doinstructions for line 24b). can deduct only 50% of your business meal not deduct as wages the amount

You cannot deduct expenses for attend- and entertainment expenses, including applicable to depreciation and other ex- ing a convention, seminar, or similar meet- meals incurred while away from home on penses claimed elsewhere. ing held outside the North American area business. However, for individuals subject In most cases, you are required to fileunless the meeting is directly related to to the Department of Transportation (DOT) Form W-2, Wage and Tax Statement, foryour trade or business and it is as reasona- hours of service limits, that percentage is each employee. See the Instructions forble for the meeting to be held outside the increased to 80% for business meals con- Forms W-2 and W-3.North American area as within it. These sumed during, or incident to, any period of rules apply to both employers and employ- duty for which those limits are in effect. ees. Other rules apply to luxury water Individuals subject to the DOT hours of travel. service limits include the following. Line 30

• Certain air transportation workersFor details on travel expenses, see chap- Business use of your home. You may be(such as pilots, crew, dispatchers, mechan-ter 1 of Pub. 463. able to deduct certain expenses for businessics, and control tower operators) who are use of your home, subject to limitations.under Federal Aviation Administration reg- You must attach Form 8829 if you claimulations. this deduction. For details, see the Instruc-Line 24b • Interstate truck operators who are tions for Form 8829 and Pub. 587. Enter your total deductible business meal under DOT regulations. and entertainment expenses. This includes • Certain merchant mariners who are expenses for meals while traveling away under Coast Guard regulations. from home for business and for meals that Line 31

However, you can fully deduct meals,are business-related entertainment. If you have a loss, the amount of loss youincidentals, and entertainment furnished or can deduct this year may be limited. Go toDeductible expenses. Business meal ex- reimbursed to an employee if you properly line 32 before entering your loss on line 31.penses are deductible only if they are (a) treat the expense as wages subject to with- If you answered “No” on line G or are adirectly related to or associated with the holding. You can also fully deduct meals, qualified joint venture reporting only rentalactive conduct of your trade or business, (b) incidentals, and entertainment provided to real estate, also see the Instructions fornot lavish or extravagant, and (c) incurred a nonemployee to the extent the expenses Form 8582. Enter the net profit or deducti-while you or your employee is present at are includible in the gross income of that ble loss here. Combine this amount withthe meal. person and reported on Form 1099-MISC. any profit or loss from other businesses andSee Pub. 535 for details and other excep-You cannot deduct any expense paid or enter the total on both Form 1040, line 12,tions.incurred for a facility (such as a yacht or and Schedule SE, line 2, or on Form hunting lodge) used for any activity usually 1040NR, line 13. Nonresident aliens usingDaycare providers. If you qualify as aconsidered entertainment, amusement, or Form 1040NR should also enter the total onfamily daycare provider, you can use therecreation. Schedule SE, line 2, if you are coveredstandard meal and snack rates, instead of

under the U.S. social security system due toAlso, you cannot deduct membership actual costs, to compute the deductible cost an international social security agreementdues for any club organized for business, of meals and snacks provided to eligible currently in effect. See the Schedule SEpleasure, recreation, or other social pur- children. See Pub. 587 for details, includ- instructions for information on interna-pose. This includes country clubs, golf and ing recordkeeping requirements. tional social security agreements. Estatesathletic clubs, airline and hotel clubs, and and trusts should enter the total on Formclubs operated to provide meals under con- 1041, line 3.ditions favorable to business discussion. Line 25But it does not include civic or public serv- Excess farm loss rules. If your Schedule C

ice organizations, professional organiza- Deduct utility expenses only for your trade activity includes processing a farm com- tions (such as bar and medical or business. modity as part of your farming business, associations), business leagues, trade as- your deductible loss from that activity mayLocal telephone service. If you used yoursociations, chambers of commerce, boards be limited if you received certain subsidies.home phone for business, do not deduct theof trade, and real estate boards, unless a See the Instructions for Schedule F for a listbase rate (including taxes) of the firstprincipal purpose of the organization is to of those subsidies. Use one of the work-phone line into your residence. But you canentertain, or provide entertainment facili- sheets in the Schedule F instructions to de-deduct any additional costs you incurredties for, members or their guests. termine if you have an excess farm loss.for business that are more than the base rate

See the Instructions for Schedule F forThere are exceptions to these rules as of the first phone line. For example, if you more details on how to complete the work-well as other rules that apply to sky-box had a second line, you can deduct the busi- sheets.rentals and tickets to entertainment events. ness percentage of the charges for that line,

See chapters 1 and 2 of Pub. 463. including the base rate charges. Statutory employees. Include your net profit or deductible loss from line 31 withStandard meal allowance. Instead of de- other Schedule C amounts on Form 1040,ducting the actual cost of your meals while line 12, or on Form 1040NR, line 13. How-traveling away from home, you can use the Line 26 ever, do not report this amount on Schedulestandard meal allowance for your daily

Enter the total salaries and wages for the SE, line 2. If you were a statutory employeemeals and incidental expenses. Under this tax year. Do not include salaries and wages and are required to file Schedule SE be-method, you deduct a specified amount, de- deducted elsewhere on your return or cause of other self-employment income,pending on where you travel, instead of amounts paid to yourself. Reduce your de- see the Instructions for Schedule SE.keeping records of your actual meal ex- duction by the amounts claimed on:penses. However, you must still keep rec- Rental real estate activity. Unless you areords to prove the time, place, and business • Form 5884, Work Opportunity Credit, a qualifying real estate professional, apurpose of your travel. line 2; rental real estate activity is a passive activ-• Form 8844, Empowerment Zone andThe standard meal allowance is the fed- ity, even if you materially participated in Renewal Community Employment Credit,eral M&IE rate. You can find these rates on the activity. If you have a loss, you may line 2;the Internet at www.gsa.gov. Click on “Per need to file Form 8582 to figure your de-

Diem Rates” for links to locations inside • Form 8845, Indian Employment ductible loss to enter on line 31. See the and outside the continental United States. Credit, line 4; and Instructions for Form 8582.

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Notary public. Do not enter your net profit checked box 32b and you do not attach Certain direct and indirect ex- from line 31 on Schedule SE, line 2, unless penses may have to be capital-Form 6198, the processing of your tax re- you are required to file Schedule SE be- ized or included in inventory.turn may be delayed. cause of other self-employment income. See the Instructions for Part II.

Any loss from this business not allowedSee the Instructions for Schedule SE. See Pub. 538 for additional information. for 2011 only because of the at-risk rules is

Community income. If you and your treated as a deduction allocable to the busi- spouse had community income and are fil- ness in 2012. ing separate returns, see the Instructions for Line 33 Schedule SE before figuring self-employ- For details, see the Instructions for

Your inventories can be valued at cost, thement tax. Form 6198 and Pub. 925. lower of cost or market, or any other

Earned income credit. If you have a net method approved by the IRS. However, profit on line 31, this amount is earned in- you are required to use cost if you are using come and may qualify you for the earned the cash method of accounting.income credit (EIC). Part III. Cost of Goods

To figure your EIC, use the in- Soldstructions for Form 1040, lines Line 35In most cases, if you engaged in a trade or64a and 64b. Complete all ap- If you are changing your method of ac-business in which the production, purchase,plicable steps plus Worksheet counting beginning with 2011, refigure lastor sale of merchandise was an income-pro-B. If you are required to file Schedule SE, year’s closing inventory using your newremember to enter the deductible portion of ducing factor, you must take inventories method of accounting and enter the resultyour self-employment tax in Part 1, line 1d, into account at the beginning and end of

of Worksheet B. on line 35. If there is a difference betweenyour tax year. last year’s closing inventory and the

Exception for certain taxpayers. If you are refigured amount, attach an explanation a qualifying taxpayer or a qualifying small and take it into account when figuring yourLine 32 business taxpayer (discussed next), you can section 481(a) adjustment. For details, see account for inventoriable items in the same the example under Line F.At-risk rules. In most cases, if you have a manner as materials and supplies that arebusiness loss and amounts invested in the not incidental. Under this accountingbusiness for which you are not at risk, you method, inventory costs for raw materialsmust complete Form 6198 to figure your Line 41purchased for use in producing finishedallowable loss. The at-risk rules generally goods and merchandise purchased for re-limit the amount of loss (including loss on If you account for inventoriable items in sale are deductible in the year the finishedthe disposition of assets) you can claim to the same manner as materials and supplies goods or merchandise are sold (but notthe amount you could actually lose in the that are not incidental, enter on line 41 the before the year you paid for the raw materi-business. portion of your raw materials and merchan- als or merchandise, if you are also using the dise purchased for resale that is included onCheck box 32b if you have amounts in- cash method). Enter amounts paid for all line 40 and was not sold during the year.vested in this business for which you are raw materials and merchandise duringnot at risk, such as the following. 2011 on line 36. The amount you can de-• Nonrecourse loans used to finance the duct for 2011 is figured on line 42.

business, to acquire property used in the business, or to acquire the business that are Qualifying taxpayer. This is a taxpayer Part IV. Information on not secured by your own property (other (a) whose average annual gross receipts for than property used in the business). How- the 3 prior tax years are $1 million or less, Your Vehicleever, there is an exception for certain non- and (b) whose business is not a tax shelter recourse financing borrowed by you in (as defined in section 448(d)(3)). connection with holding real property.

Qualifying small business taxpayer. Line 44b• Cash, property, or borrowed amounts This is a taxpayer (a) whose average annualused in the business (or contributed to the gross receipts for the 3 prior tax years are In most cases, commuting is travel betweenbusiness, or used to acquire the business) $10 million or less, (b) whose business is your home and a work location. If you con-that are protected against loss by a guaran- not a tax shelter (as defined in section verted your vehicle during the year fromtee, stop-loss agreement, or other similar 448(d)(3)), and (c) whose principal busi- personal to business use (or vice versa),arrangement (excluding casualty insurance ness activity is not an ineligible activity asand insurance against tort liability). enter your commuting miles only for theexplained in Rev. Proc. 2002-28. You can period you drove your vehicle for business.• Amounts borrowed for use in the busi- find Rev. Proc. 2002-28 on page 815 of

ness from a person who has an interest in For information on certain travel that isInternal Revenue Bulletin 2002-18 at the business, other than as a creditor, or considered a business expense rather thanwww.irs.gov/pub/irs-irbs/irb02-18.pdf. who is related under section 465(b)(3)(C) commuting, see the Instructions for

Changing accounting methods. Fileto a person (other than you) having such an Form 2106.Form 3115 if you are a qualifying taxpayerinterest. or qualifying small business taxpayer andFiguring your deductible loss. If all want to change to the cash method or toamounts are at risk in this business, check account for inventoriable items as non-inci-box 32a. If you answered “Yes” on line G, Part V. Otherdental materials and supplies.enter your loss on line 31. But if you an-

swered “No” on line G, you may need to Additional information. For additional Expensescomplete Form 8582 to figure your allowa- guidance on this method of accounting forble loss to enter on line 31. See the Instruc- Include all ordinary and necessary businessinventoriable items, see the following.tions for Form 8582 for details. expenses not deducted elsewhere on• Pub. 538 discusses both exceptions. Schedule C. List the type and amount ofIf you checked box 32b, first complete • If you are a qualifying taxpayer, see each expense separately in the space pro-Form 6198 to determine the amount of your Rev. Proc. 2001-10, on page 272 of Internal vided. Enter the total on lines 48 and 27a.deductible loss. If you answered “Yes” on Revenue Bulletin 2001-2 at Do not include the cost of business equip-line G, enter that amount on line 31. But if www.irs.gov/pub/irs-irbs/irb01-02.pdf. ment or furniture, replacements or perma-you answered “No” on line G, your loss

nent improvements to property, or• If you are a qualifying small businessmay be further limited. See the Instructions personal, living, and family expenses. Dotaxpayer, see Rev. Proc. 2002-28, on pagefor Form 8582. If your at-risk amount is not include charitable contributions. Also,815 of Internal Revenue Bulletin 2002-18zero or less, enter -0- on line 31. Be sure to

attach Form 6198 to your return. If you at www.irs.gov/pub/irs-irbs/irb02-18.pdf. you cannot deduct fines or penalties paid to

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a government for violating any law. For income and are definitely known to be remove architectural or transportation bar- details on business expenses, see Pub. 535. worthless. If you later collect a debt that riers to individuals with disabilities and the

you deducted as a bad debt, include it as elderly. However, you cannot take both a Amortization. Include amortization in this income in the year collected. For details, credit (on Form 8826) and a deduction for part. For amortization that begins in 2011, see Pub. 535. the same expenditures. you must complete and attach Form 4562.

Qualified disaster expenses. You can electBusiness start-up costs. If your businessYou can elect to amortize such costs as: to deduct certain expenses you paid or in-began in 2011, you can elect to deduct up to• The cost of pollution-control facili- curred before January 1, 2012, as a result of$5,000 of certain business start-up costs.ties; a federally declared disaster. For more in-The $5,000 limit is reduced (but not below formation, see chapter 7 of Pub. 535.• Amounts paid for research and experi- zero) by the amount by which your total

mentation; start-up costs exceed $50,000. Your re- Film and television production expenses. • Qualified revitalization expenditures; maining start-up costs can be amortized You can elect to deduct costs of certain

over a 180-month period, beginning with qualified film and television productions.• Amounts paid to acquire, protect, ex- the month the business began. For details, see Pub. 535.pand, register, or defend trademarks or

trade names; or Forestation and reforestation costs. Re-For details, see chapters 7 and 8 of Pub.• Goodwill and certain other in- forestation costs are generally capital ex-535. For amortization that begins in 2011, tangibles. penditures. However, for each qualifiedyou must complete and attach Form 4562.

timber property, you can elect to expenseIn most cases, you cannot amortize real up to $10,000 ($5,000 if married filing sep-Costs of making commercial buildingsproperty construction period interest and arately) of qualifying reforestation costsenergy efficient. You may be able to de-taxes. Special rules apply for allocating in- paid or incurred in 2011.duct part or all of the cost of modifyingterest to real or personal property produced

existing commercial buildings to makein your trade or business. You can elect to amortize the remaining them energy efficient. For details, see sec- costs over 84 months. For amortization thatFor a complete list, see the Instructions tion 179D, Notice 2006-52, and Notice begins in 2011, you must complete and at-for Form 4562, Part VI. 2008-40. Notice 2006-52, 2006-26 I.R.B. tach Form 4562. 1175, is available atAt-risk loss deduction. Any loss from this The amortization election does not ap-www.irs.gov/irb/2006-26_IRB/ar11.html.business that was not allowed as a deduc- ply to trusts, and the expense election doesNotice 2008-40, 2008-14 I.R.B. 725, istion last year only because of the at-risk not apply to estates and trusts. For detailsavailable atrules is treated as a deduction allocable to on reforestation expenses, see chapters 7www.irs.gov/irb/2008-14_IRB/ar12.html.this business in 2011. For the loss to be and 8 of Pub. 535.

deductible, the amount that is “at risk” must Deduction for removing barriers tobe increased. individuals with disabilities and the eld-

Bad debts. Include debts and partial debts erly. You may be able to deduct up to from sales or services that were included in $15,000 of costs paid or incurred in 2011 to

Principal Business or Professional Activity Codes

These codes for the Principal Business or Professional Select the category that best describes your primary of real estate agents and brokers) and enter it on Activity classify sole proprietorships by the type of business activity (for example, Real Estate). Then Schedule C or C-EZ, line B. activity they are engaged in to facilitate the select the activity that best identifies the principal Note. If your principal source of income is fromadministration of the Internal Revenue Code. These source of your sales or receipts (for example, real farming activities, you should file Schedule F.six-digit codes are based on the North American estate agent). Now find the six-digit code assigned to Industry Classification System (NAICS). this activity (for example, 531210, the code for offices

561210 Facilities support 113000 Forestry & logging (including 711510 Independent artists, writers, &Accommodation, Food (management) services forest nurseries & timber performersServices, & Drinking Places

tracts)561600 Investigation & security 711100 Performing arts companiesAccommodation services 114210 Hunting & trapping 711300 Promoters of performing arts,721310 Rooming & boarding houses

561720 Janitorial services Support Activities for Agriculture & sports, & similar events 721210 RV (recreational vehicle) Forestry561730 Landscaping services 711210 Spectator sports (includingparks & recreational camps

professional sports clubs &115210 Support activities for animal561110 Office administrative services721100 Traveler accommodation racetrack operations)production (including farriers)561420 Telephone call centers(including hotels, motels, & 115110 Support activities for crop(including telephonebed & breakfast inns) Construction of Buildingsproduction (including cottonanswering services &Food Services & Drinking Places ginning, soil preparation, 236200 Nonresidential buildingtelemarketing bureaus)

722410 Drinking places (alcoholic planting, & cultivating) construction561500 Travel arrangement &beverages) 115310 Support activities for forestry 236100 Residential buildingreservation services 722110 Full-service restaurants construction561490 Other business support 722210 Limited-service eating places Arts, Entertainment, & Heavy and Civil Engineeringservices (including

Recreation722300 Special food services Constructionrepossession services, court (including food service reporting, & stenotype Amusement, Gambling, & Recreation 237310 Highway, street, & bridge contractors & caterers) services) Industries construction

561790 Other services to buildings & 713100 Amusement parks & arcades 237210 Land subdivisionAdministrative & Support and dwellings 713200 Gambling industries 237100 Utility system constructionWaste Management & 561900 Other support services 713900 Other amusement & 237990 Other heavy & civilRemediation Services (including packaging & recreation services (including engineering constructionlabeling services, &Administrative & Support Services golf courses, skiing facilities, Specialty Trade Contractorsconvention & trade show561430 Business service centers marinas, fitness centers, 238310 Drywall & insulationorganizers)(including private mail bowling centers, skating contractorsWaste Management & Remediationcenters & copy shops) rinks, miniature golf courses) 238210 Electrical contractorsServices561740 Carpet & upholstery cleaning Museums, Historical Sites, & Similar 238350 Finish carpentry contractors562000 Waste management &services Institutions

remediation services 238330 Flooring contractors561440 Collection agencies 712100 Museums, historical sites, & 238130 Framing carpentry contractorssimilar institutions561450 Credit bureaus Agriculture, Forestry, Hunting, 238150 Glass & glazing contractorsPerforming Arts, Spectator Sports, &561410 Document preparation & Fishing Related Industries 238140 Masonry contractorsservices

112900 Animal production (including 238320 Painting & wall covering561300 Employment services 711410 Agents & managers forbreeding of cats and dogs) contractorsartists, athletes, entertainers,561710 Exterminating & pest control 114110 Fishing & other public figures 238220 Plumbing, heating & air-services conditioning contractors

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Principal Business or Professional Activity Codes���� �� ��� 238110 Poured concrete foundation & 621900 Other ambulatory health care Food Manufacturing 811210 Electronic & precision

structure contractors services (including ambulance equipment repair &311110 Animal food mfg. services, blood, & organ maintenance238160 Roofing contractors 311800 Bakeries & tortilla mfg.banks) 811430 Footwear & leather goods238170 Siding contractors 311500 Dairy product mfg.Hospitals repair238910 Site preparation contractors 311400 Fruit & vegetable preserving 811410 Home & garden equipment &622000 Hospitals238120 Structural steel & precast & speciality food mfg. appliance repair &Nursing & Residential Care Facilitiesconcrete construction 311200 Grain & oilseed milling maintenancecontractors 623000 Nursing & residential care 311610 Animal slaughtering & 811420 Reupholstery & furniturefacilities238340 Tile & terrazzo contractors processing repair

Social Assistance238290 Other building equipment 311710 Seafood product preparation 811490 Other personal & householdcontractors 624410 Child day care services & packaging goods repair & maintenance 238390 Other building finishing 624200 Community food & housing, 311300 Sugar & confectionery

contractors & emergency & other relief product mfg. Professional, Scientific, & 238190 Other foundation, structure, & services 311900 Other food mfg. (including Technical Services

building exterior contractors 624100 Individual & family services coffee, tea, flavorings, & 541100 Legal services238990 All other specialty trade seasonings)624310 Vocational rehabilitation 541211 Offices of certified publiccontractors services Leather & Allied Product accountants Manufacturing

541214 Payroll servicesEducational Services Information 316210 Footwear mfg. (including 541213 Tax preparation services611000 Educational services leather, rubber, & plastics)511000 Publishing industries (except 541219 Other accounting services(including schools, colleges, Internet) 316110 Leather & hide tanning &

& universities) Architectural, Engineering, &finishingBroadcasting (except Internet) & Related ServicesTelecommunications 316990 Other leather & allied productFinance & Insurance 541310 Architectural servicesmfg.515000 Broadcasting (except Internet)Credit Intermediation & Related 541350 Building inspection servicesNonmetallic Mineral Product517000 Telecommunications &Activities 541340 Drafting servicesManufacturingInternet service providers

522100 Depository credit 541330 Engineering services327300 Cement & concrete productData Processing Servicesintermediation (including mfg. 541360 Geophysical surveying &518210 Data processing, hosting, &commercial banking, savings mapping services327100 Clay product & refractoryrelated servicesinstitutions, & credit unions) mfg. 541320 Landscape architecture519100 Other information services522200 Nondepository credit services327210 Glass & glass product mfg.(including news syndicates &intermediation (including

541370 Surveying & mapping (exceptlibraries, Internet publishing 327400 Lime & gypsum product mfg.sales financing & consumer geophysical) services& broadcasting)lending) 327900 Other nonmetallic mineral

541380 Testing laboratoriesMotion Picture & Sound Recording product mfg.522300 Activities related to credit Computer Systems Design & Relatedintermediation (including loan 512100 Motion picture & video

Mining Servicesbrokers) industries (except video rental)Insurance Agents, Brokers, & 212110 Coal mining 541510 Computer systems design &

Related Activities related services512200 Sound recording industries 212200 Metal ore mining Specialized Design Services524210 Insurance agencies & 212300 Nonmetallic mineral mining

Manufacturingbrokerages & quarrying 541400 Specialized design services 524290 Other insurance related 315000 Apparel mfg. (including interior, industrial,211110 Oil & gas extraction

activities graphic, & fashion design)312000 Beverage & tobacco product 213110 Support activities for mining Securities, Commodity Contracts, & mfg. Other Professional, Scientific, & Other Financial Investments & Technical Services334000 Computer & electronic Other Services Related Activities product mfg. 541800 Advertising & related servicesPersonal & Laundry Services 523140 Commodity contracts brokers 335000 Electrical equipment, 541600 Management, scientific, &812111 Barber shops

appliance, & component mfg.523130 Commodity contracts dealers technical consulting services812112 Beauty salons 332000 Fabricated metal product mfg.523110 Investment bankers & 541910 Market research & public812220 Cemeteries & crematoriessecurities dealers opinion polling337000 Furniture & related product

812310 Coin-operated laundries &mfg.523210 Securities & commodity 541920 Photographic servicesdrycleanersexchanges 333000 Machinery mfg. 541700 Scientific research &812320 Drycleaning & laundry523120 Securities brokers development services339110 Medical equipment & services (except supplies mfg.523900 Other financial investment 541930 Translation & interpretationcoin-operated) (including

activities (including services322000 Paper mfg. laundry & drycleaning investment advice) 541940 Veterinary services324100 Petroleum & coal products dropoff & pickup sites)

mfg. 541990 All other professional,812210 Funeral homes & funeralHealth Care & Social scientific, & technical326000 Plastics & rubber products servicesAssistance servicesmfg. 812330 Linen & uniform supply Ambulatory Health Care Services 331000 Primary metal mfg. 812113 Nail salons Real Estate & Rental &621610 Home health care services 323100 Printing & related support 812930 Parking lots & garages Leasingactivities621510 Medical & diagnostic 812910 Pet care (except veterinary)

Real Estatelaboratories 313000 Textile mills services 621310 Offices of chiropractors 531100 Lessors of real estate314000 Textile product mills 812920 Photofinishing

(including miniwarehouses &621210 Offices of dentists 336000 Transportation equipment 812190 Other personal care services self-storage units)mfg.621330 Offices of mental health (including diet & weight 531210 Offices of real estate agentspractitioners (except 321000 Wood product mfg. reducing centers)

& brokersphysicians) 339900 Other miscellaneous mfg. 812990 All other personal services 531320 Offices of real estate621320 Offices of optometrists Chemical Manufacturing Repair & Maintenance appraisers621340 Offices of physical, 325100 Basic chemical mfg. 811120 Automotive body, paint, 531310 Real estate property managersoccupational & speech interior, & glass repair325500 Paint, coating, & adhesivetherapists, & audiologists 531390 Other activities related to real

mfg. 811110 Automotive mechanical & estate621111 Offices of physicians (except electrical repair &325300 Pesticide, fertilizer, & othermental health specialists) Rental & Leasing Servicesmaintenanceagricultural chemical mfg.621112 Offices of physicians, mental 532100 Automotive equipment rental811190 Other automotive repair &325410 Pharmaceutical & medicinehealth specialists & leasingmaintenance (including oilmfg.621391 Offices of podiatrists 532400 Commercial & industrialchange & lubrication shops &325200 Resin, synthetic rubber, & machinery & equipment621399 Offices of all other car washes)artificial & synthetic fibers & rental & leasingmiscellaneous health 811310 Commercial & industrialfilaments mfg.practitioners 532210 Consumer electronics &machinery & equipment325600 Soap, cleaning compound, & appliances rental621400 Outpatient care centers (except automotive &toilet preparation mfg. electronic) repair & 532220 Formal wear & costume325900 Other chemical product & maintenance rentalpreparation mfg.

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Principal Business or Professional Activity Codes���� �� ��� 532310 General rental centers Gasoline Stations 454113 Mail-order houses 423300 Lumber & other construction

materials532230 Video tape & disc rental 454210 Vending machine operators447100 Gasoline stations (including 423800 Machinery, equipment, &convenience stores with gas)532290 Other consumer goods rental 454390 Other direct selling

suppliesestablishments (includingGeneral Merchandise Stores door-to-door retailing, frozen 423500 Metal & mineral (exceptReligious, Grantmaking, Civic, 452000 General merchandise stores food plan providers, party petroleum)Professional, & Similar Health & Personal Care Stores plan merchandisers, & 423100 Motor vehicle & motorOrganizations

446120 Cosmetics, beauty supplies, & coffee-break service vehicle parts & supplies813000 Religious, grantmaking, civic, perfume stores providers) 423400 Professional & commercialprofessional, & similar 446130 Optical goods stores equipment & suppliesorganizations Transportation &446110 Pharmacies & drug stores 423930 Recyclable materialsWarehousing446190 Other health & personal careRetail Trade 423910 Sporting & recreational goods 481000 Air transportationstores & suppliesBuilding Material & Garden 485510 Charter bus industryMotor Vehicle & Parts DealersEquipment & Supplies Dealers 423920 Toy & hobby goods & 484110 General freight trucking, local441300 Automotive parts, accessories, supplies444130 Hardware stores

& tire stores 484120 General freight trucking, long 423990 Other miscellaneous durable444110 Home centers distance441222 Boat dealers goods444200 Lawn & garden equipment &

485210 Interurban & rural bus441221 Motorcycle dealers Merchant Wholesalers, Nondurablesupplies stores transportation Goods441110 New car dealers444120 Paint & wallpaper stores

486000 Pipeline transportation 424300 Apparel, piece goods, &441210 Recreational vehicle dealers444190 Other building materials 482110 Rail transportation notions(including motor home &dealers

travel trailer dealers) 487000 Scenic & sightseeing 424800 Beer, wine, & distilledClothing & Accessories Stores transportation alcoholic beverage441120 Used car dealers448130 Children’s & infants’ clothing 485410 School & employee bus 424920 Books, periodicals, &441229 All other motor vehiclestores transportation newspapersdealers448150 Clothing accessories stores 484200 Specialized freight trucking 424600 Chemical & allied productsSporting Goods, Hobby, Book, &448140 Family clothing stores (including household movingMusic Stores 424210 Drugs & druggists’ sundries

448310 Jewelry stores vans)451211 Book stores 424500 Farm product raw materials 448320 Luggage & leather goods 485300 Taxi & limousine service451120 Hobby, toy, & game stores 424910 Farm suppliesstores 485110 Urban transit systems451140 Musical instrument & 424930 Flower, nursery stock, &448110 Men’s clothing stores 483000 Water transportationsupplies stores florists’ supplies 448210 Shoe stores 485990 Other transit & ground451212 News dealers & newsstands 424400 Grocery & related products 448120 Women’s clothing stores passenger transportation451220 Prerecorded tape, compact 424950 Paint, varnish, & supplies 448190 Other clothing stores 488000 Support activities fordisc, & record stores 424100 Paper & paper products

transportation (includingElectronic & Appliance Stores 451130 Sewing, needlework, & piece 424700 Petroleum & petroleummotor vehicle towing)443130 Camera & photographic goods stores productsCouriers & Messengerssupplies stores 451110 Sporting goods stores 424940 Tobacco & tobacco products 492000 Couriers & messengers443120 Computer & software stores Miscellaneous Store Retailers 424990 Other miscellaneous Warehousing & Storage Facilities443111 Household appliance stores nondurable goods453920 Art dealers

443112 Radio, television, & other 493100 Warehousing & storage453110 Florists electronics stores (except leases of Wholesale Electronic Markets453220 Gift, novelty, & souvenir miniwarehouses &Food & Beverage Stores and Agents & Brokersstores self-storage units)445310 Beer, wine, & liquor stores 425110 Business to business453930 Manufactured (mobile) home

electronic markets445220 Fish & seafood markets dealers Utilities 425120 Wholesale trade agents &445230 Fruit & vegetable markets 453210 Office supplies & stationery 221000 Utilities brokersstores445100 Grocery stores (including

supermarkets & convenience 453910 Pet & pet supplies stores Wholesale Trade 999999 Unclassified establishmentsstores without gas) 453310 Used merchandise stores Merchant Wholesalers, Durable (unable to classify)445210 Meat markets 453990 All other miscellaneous store Goods 445290 Other specialty food stores retailers (including tobacco, 423600 Electrical & electronic goodscandle, & trophy shops)Furniture & Home Furnishing Stores 423200 Furniture & home furnishingNonstore Retailers442110 Furniture stores 423700 Hardware, & plumbing &

454112 Electronic auctions442200 Home furnishings stores heating equipment & supplies 454111 Electronic shopping 423940 Jewelry, watch, precious 454310 Fuel dealers stone, & precious metals

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Internal Revenue Service

2011 Instructions for Schedule D (and Form 8949)

These instructions explain how to complete Form 8949 and Schedule D (Form 1040). Form 8949 is new. Many transactions that, in previous years, would have been reported on Sched-Capital Gains ule D or D-1 must be reported on Form 8949 if they occur in 2011. Complete Form 8949 before you complete line 1, 2, 3, 8, 9, or 10 of Schedule D.and Losses Use Form 8949 to report:

• The sale or exchange of a capital asset (defined below) not reported on another form or schedule,

• Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit, and

• Nonbusiness bad debts. Use Schedule D: • To figure the overall gain or loss from transactions reported on Form 8949, • To report a gain from Form 2439 or 6252 or Part I of Form 4797, • To report a gain or loss from Form 4684, 6781, or 8824, • To report a gain or loss from a partnership, S corporation, estate or trust, • To report capital gain distributions not reported directly on Form 1040, line 13 (or

effectively connected capital gain distributions not reported directly on Form 1040NR, line 14), and

• To report a capital loss carryover from 2010 to 2011. Additional information. See Pub. 544 and Pub. 550 for more details. For a comprehensive filled-in example of both Form 8949 and Schedule D, see Pub. 550.

column (b) of Form 8949 and report an 3. The disposition of noncapital assets adjustment to your gain or loss in column other than inventory or property held pri- (g). See the instructions for Form 8949, marily for sale to customers in the ordinary columns (b) and (g). course of your trade or business.

4. Ordinary loss on the sale, exchange, Short sales. Some instructions for report- or worthlessness of small business invest-What’s New ing short sales have changed. See the in- ment company (section 1242) stock.

The IRS has created a page on IRS.gov for structions for Form 8949, columns (c) and 5. Ordinary loss on the sale, exchange,information about Form 8949 and Schedule (d).

or worthlessness of small business (sectionD at www.irs.gov/form8949. Information 1244) stock.Schedule D-1. For 2011 transactions,about any tax law changes or other new

6. Ordinary gain or loss on securitiesSchedule D-1 is no longer in use. Formdevelopments affecting Schedule D or held in connection with your trading busi-8949 replaces it.Form 8949 will be posted on that page. ness, i f you previously made a

Form 8949. Form 8949 is new. Many mark-to-market election. See Traders in transactions that, in previous years, would Securities, later. have been reported on Schedule D or D-1 General Instructionsmust be reported on Form 8949 if they oc- Use Form 4684 to report involuntary cur in 2011. Complete all necessary pages conversions of property due to casualty orOther Forms You May Haveof Form 8949 before completing line 1, 2, theft.To File3, 8, 9, or 10 of Schedule D. Instructions for how to complete Form 8949 are included in Use Form 6781 to report gains andUse Form 4797 to report the following. these instructions. losses from section 1256 contracts and

1. The sale or exchange of: straddles. Basis on Form 1099-B. If you sold a cov-

a. Property used in a trade or business;ered security in 2011, your broker will send Use Form 8824 to report like-kind ex- b. Depreciable and amortizable prop-you a Form 1099-B (or substitute state- changes. A like-kind exchange occurs

erty;ment) that shows your basis. This will help when you exchange business or investment you complete Form 8949. Generally, a cov- c. Oil, gas, geothermal, or other mineral property for property of a like kind. ered security is a security you acquired af- property; and ter 2010, with certain exceptions explained Capital Assetd. Section 126 property. in the instructions for Form 8949, column

2. The involuntary conversion (other Most property you own and use for per-(f). than from casualty or theft) of property sonal purposes, pleasure, or investment is a

Adjustments to gain or loss on Form 8949. used in a trade or business and capital as- capital asset. For example, your house, fur- In certain situations, you must put a code in sets held for business or profit. niture, car, stocks, and bonds are capital

D-1 Cat. No. 24331IDec 12, 2011

assets. A capital asset is any property held For more information on basis, see the If there is an amount in box 2c, see instructions for Form 8949, column (f), Exclusion of Gain on Qualified Small Busi-by you except the following. later, and these publications. ness (QSB) Stock, later.• Stock in trade or other property in-

• Pub. 551, Basis of Assets. If there is an amount in box 2d, includecluded in inventory or held mainly for sale that amount on line 4 of the 28% Rate Gain• Pub. 550, Investment Income and to customers. But see the Tip about certain Worksheet in these instructions if you com-Expenses (Including Capital Gains andmusical compositions or copyrights, later. plete line 18 of Schedule D.Losses).• Accounts or notes receivable for serv-

If you received capital gain distributionsices performed in the ordinary course of If you lost or did not keep records to as a nominee (that is, they were paid to youyour trade or business or as an employee, or determine your basis in securities, contact but actually belong to someone else), reportfrom the sale of stock in trade or other your broker for help. on Schedule D, line 13, only the amountproperty held mainly for sale to customers. that belongs to you. Attach a statementThe IRS partners with compa-• Depreciable property used in your showing the full amount you received andnies that offer Form 8949trade or business, even if it is fully depreci- the amount you received as a nominee. Seesoftware that can import tradesated. the Instructions for Schedule B to learnfrom many brokerage firms and• Real estate used in your trade or busi- about the requirement for you to file Formsaccounting software to help you keep track

ness. 1099-DIV and 1096.of your adjusted basis in securities. To find • Copyrights, literary, musical, or artis- out more, go to www.irs.gov/efile. Sale of Your Hometic compositions, letters or memoranda, or

similar property (a) created by your per- Report the sale or exchange of your mainShort Term or Long Term home on Form 8949 if:sonal efforts; (b) prepared or produced for Separate your capital gains and losses ac-

you (in the case of letters, memoranda, or • You cannot exclude all of your gaincording to how long you held or owned the similar property); or (c) that you received from income, orproperty. The holding period for short-term from someone who created them or for capital gains and losses is 1 year or less. • You received a Form 1099-S for the whom they were created, as mentioned in The holding period for long-term capital sale or exchange. (a) or (b), in a way (such as by gift) that gains and losses is more than 1 year. To Any gain you cannot exclude is taxable. entitled you to the basis of the previous figure the holding period, begin counting Generally, if you meet the two following owner. But see the Tip about certain musi- on the day after you received the property tests, you can exclude up to $250,000 of cal compositions or copyrights, later. and include the day you disposed of it. gain. If both you and your spouse meet

these tests and you file a joint return, you• U.S. Government publications, in- If you disposed of property that you ac- can exclude up to $500,000 of gain (butcluding the Congressional Record, that you quired by inheritance from someone who only one spouse needs to meet the owner-received from the Government, other than died before or after 2010, report the dispo- ship requirement in Test 1).by purchase at the normal sales price, or sition as a long-term gain or loss, regardless that you got from someone who had re- Test 1. During the 5-year period ending onof how long you held the property. Also ceived it in a similar way, if your basis is the date you sold or exchanged your home,report the disposition as a long-term gain or determined by reference to the previous you owned it for 2 years or more (the own-loss if you acquired the property from owner’s basis. ership requirement) and lived in it as yoursomeone who died in 2010 and the execu-

main home for 2 years or more (the usetor of the decedent’s estate did not elect to• Certain commodities derivative finan- requirement).file Form 8939, Allocation of Increase incial instruments held by a dealer and not

Basis for Property Acquired From a Dece-connected to the dealer’s activities as a Test 2. You have not excluded gain on the dent. If you acquired the property fromdealer. See section 1221(a)(6). sale or exchange of another main home someone who died in 2010 and the execu- during the 2-year period ending on the date• Certain hedging transactions entered tor made the election to file Form 8939, see of the sale or exchange of your home.into in the normal course of your trade or Pub. 4895.business. See section 1221(a)(7). Even if you do not meet one or both of

A nonbusiness bad debt must be treated• Supplies regularly used in your trade the above two tests, you still can claim an as a short-term capital loss. See Pub. 550 exclusion if you sold or exchanged theor business. for what qualifies as a nonbusiness bad home because of a change in place of em- debt and how to enter it on Form 8949. ployment, health, or certain unforeseen cir-You can elect to treat as capital

cumstances. In this case, the maximumassets certain musical composi- Capital Gain Distributions amount of gain you can exclude is reduced.tions or copyrights you sold or TIP

exchanged. See Pub. 550 for These distributions are paid by a mutual If your spouse died before the sale or details. fund (or other regulated investment com- exchange, you can exclude up to $500,000

pany) or real estate investment trust from of gain if: its net realized long-term capital gains. Dis- • The sale or exchange is no later than 2Basis and Recordkeeping tributions of net realized short-term capital years after your spouse’s death,Basis is the amount of your investment in gains are not treated as capital gains. In- • Just before your spouse’s death, bothproperty for tax purposes. The basis of stead, they are included on Form 1099-DIV

spouses met the use requirement of Test 1,property you buy is usually its cost. You as ordinary dividends. at least one spouse met the ownership re-need to know your basis to figure any gain quirement of Test 1, and both spouses metEnter on Schedule D, line 13, the totalor loss on the sale or other disposition of Test 2, andcapital gain distributions paid to you duringthe property. You must keep accurate rec-

the year, regardless of how long you held • You did not remarry before the sale orords that show the basis and, if applicable, your investment. This amount is shown in exchange.adjusted basis of your property. Your rec- box 2a of Form 1099-DIV.ords should show the purchase price, in- You can choose to have the 5-year test

cluding commissions; increases to basis, If there is an amount in box 2b, include period for ownership and use in Test 1 sus- such as the cost of improvements; and de- that amount on line 11 of the Unrecaptured pended during any period you or your creases to basis, such as depreciation, non- Section 1250 Gain Worksheet in these in- spouse serve outside the United States as a dividend distributions on stock, and stock structions if you complete line 19 of Sched- Peace Corps volunteer or serve on qualified splits. ule D. official extended duty as a member of the

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uniformed services or Foreign Service of umn (e), enter the excess of the total gain instructions for Form 8949, columns (b) the United States, as an employee of the over the recapture amount. Leave columns and (g), later. intelligence community, or outside the (f) and (g) blank. Be sure to check box C at See Pub. 544 for more details on salesUnited States as an employee of the Peace the top of this Form 8949. and exchanges between related parties.Corps. This means you may be able to meet

Loss from the sale or exchange of a cap- Example. You sold land you held as anTest 1 even if, because of your service, you ital asset held for personal use is not de- investment for 5 years to your brother fordid not actually use the home as your main ductible. But if you had a loss from the sale $10,000. Your basis was $15,000. On Formhome for at least the required 2 years dur- or exchange of real estate held for personal 8949, check box C at the top. Enter $10,000ing the 5-year period ending on the date of use for which you received a Form 1099-S, on Form 8949, line 3, column (e). Entersale. you must report the transaction on Form $15,000 in column (f). Because the loss isYou cannot exclude any gain if: 8949 even though the loss is not deductible. not deductible, enter “L” in column (b) and• You acquired your home in a For example, you have a loss on the sale of $5,000 (the difference between $10,000

like-kind exchange in which all or part of a vacation home that is not your main home and $15,000) in column (g). If this is your the gain was not recognized, and and you received a Form 1099-S for the only transaction on this Form 8949, enter

transaction. Report the transaction on line 1• You sold or exchanged the home dur- $10,000 on Schedule D, line 10, column or line 3 of Form 8949, depending on howing the 5-year period beginning on the date (e). Enter $15,000 in column (f) and $5,000 long you owned the home. Complete allyou acquired it. in column (g). In column (h), enter -0- columns. Because the loss is not deducti- ($15,000 − $10,000 − $5,000).If you have to report the sale or ex- ble, enter “L” in column (b). Enter the dif-change, report it on Form 8949. If the gain At-risk rules. If you disposed of (a) an as-ference between column (e) and column (f)or loss is short-term, report it on line 1. If set used in an activity to which the at-riskas a positive amount in column (g). Forthe gain or loss is long-term, report it on rules apply or (b) any part of your interestexample, if you entered $5,000 in columnline 3. Check box C at the top of this Form in an activity to which the at-risk rules ap-(e) and $6,000 in column (f), enter $1,0008949. ply, and you have amounts in the activityin column (g). Be sure to check box C at the

for which you are not at risk, see the In-If you had a gain and can exclude part or top of this Form 8949. structions for Form 6198.all of it, enter “H” in column (b). Enter the

amount of the exclusion as a negative num- Capital Losses Passive activity rules. If the loss is allowa-ber (in parentheses) in column (g). See the ble under the at-risk rules, it then may beYou can deduct capital losses up to theinstructions for Form 8949, columns (b) subject to the passive activity rules. Seeamount of your capital gains plus $3,000and (g), later. Complete all columns. Form 8582 and its instructions for details($1,500 if married filing separately). You

See Pub. 523 for additional details, in- on reporting capital gains and losses from amay be able to use capital losses that ex- cluding how to figure and report any tax- passive activity.ceed this limit in future years. For details, able gain if: see the instructions for line 21 of Schedule

Items for Special Treatment• You (or your spouse if married) used D. Be sure to report all of your capital gains any part of the home for business or rental and losses even if you cannot use all of • Transactions by a securities dealer.purposes after May 6, 1997, or your losses in 2011. See section 1236.• There was a period of time after 2008 • Bonds and other debt instruments.Nondeductible Losseswhen the home was not your main home. See Pub. 550.

Do not deduct a loss from the direct or • Certain real estate subdivided for salePartnership Interests indirect sale or exchange of property be- that may be considered a capital asset. SeeA sale or other disposition of an interest in tween any of the following. section 1237.a partnership may result in ordinary in- • Members of a family. • Gain on the sale of depreciable prop-come, collectibles gain (28% rate gain), or • A corporation and an individual own- erty to a more than 50% owned entity or tounrecaptured section 1250 gain. For details ing more than 50% of the corporation’s a trust of which you are a beneficiary. Seeon 28% rate gain, see the instructions for stock (unless the loss is from a distribution Pub. 544.line 18 of Schedule D. For details on unre- in complete liquidation of a corporation).captured section 1250 gain, see the instruc- • Gain on the disposition of stock in an

• A grantor and a fiduciary of a trust.tions for line 19 of Schedule D. interest charge domestic international sales corporation. See section 995(c).• A fiduciary and a beneficiary of the

Capital Assets Held for same trust. • Gain on the sale or exchange of stock Personal Use in certain foreign corporations. See section• A fiduciary and a beneficiary of an-

1248.other trust created by the same grantor.Generally, gain from the sale or exchange of a capital asset held for personal use is a • Transfer of property to a partnership• An executor of an estate and a benefi- capital gain. Report it on Form 8949, Part I that would be treated as an investmentciary of that estate, unless the sale or ex- or Part II, with box C checked. However, if company if it were incorporated. See Pub.change was to satisfy a pecuniary bequest you converted depreciable property to per- 541.(that is, a bequest of a sum of money). sonal use, all or part of the gain on the sale • Sales of stock received under a quali-• An individual and a tax-exempt or- or exchange of that property may have to be fied public utility dividend reinvestmentganization controlled by the individual or recaptured as ordinary income. Use Part III plan. See Pub. 550.the individual’s family. of Form 4797 to figure the amount of ordi- • Transfer of appreciated property to anary income recapture. The recapture Report a transaction that results in a political organization. See section 84.amount is included on line 31 (and line 13) nondeductible loss on line 1 or line 3 of

• Transfer of property by a U.S. personof Form 4797. Do not enter any gain from Form 8949, depending on how long you to a foreign estate or trust. See section 684.this property on line 32 of Form 4797. If held the property. Unless you received a

you are not completing Part III for any Form 1099-B for the sale or exchange, • If you give up your U.S. citizenship other properties, enter “N/A” on line 32. If check box C at the top of this Form 8949. after June 16, 2008, you may be treated as the total gain is more than the recapture Complete all columns. Because the loss is having sold all your property for its fair amount, enter “From Form 4797” in col- not deductible, enter “L” in column (b). market value on the day before you gave up umn (a) of line 1 or line 3 of Form 8949, Enter the amount of the nondeductible loss your citizenship. This also applies to and skip columns (b) through (d). In col- as a positive number in column (g). See the long-term U.S. residents who cease to be

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lawful permanent residents after June 16, Wash Sales • Typical holding periods for securities 2008. For details, exceptions, and rules for bought and sold.A wash sale occurs when you sell or other-reporting these deemed sales, see Pub. 519 • The frequency and dollar amount ofwise dispose of stock or securities (includ-and Form 8854. your trades during the year.ing a contract or option to acquire or sell• In general, no gain or loss is recog- stock or securities) at a loss and, within 30 • The extent to which you pursue the nized on the transfer of property from an days before or after the sale or disposition, activity to produce income for a livelihood. individual to a spouse or a former spouse if you: • The amount of time you devote to thethe transfer is incident to a divorce. See

activity.1. Buy substantially identical stock orPub. 504. securities, You are considered an investor, and not• Amounts received on the retirement

2. Acquire substantially identical stock a trader, if your activity does not meet theof a debt instrument generally are treated as or securities in a fully taxable trade, above definition of a business. It does notreceived in exchange for the debt instru-

matter whether you call yourself a trader or3. Enter into a contract or option to ac-ment. See Pub. 550. a “day trader.”quire substantially identical stock or securi-• Any loss on the disposition of con-

ties, or Like an investor, a trader must reportverted wetland or highly erodible cropland 4. Acquire substantially identical stock each sale of securities (taking into accountthat is first used for farming after March 1,

or securities for your individual retirement commissions and any other costs of acquir-1986, is reported as a long-term capital loss arrangement (IRA) or Roth IRA. ing or disposing of the securities) on Formon Form 8949, but any gain is reported as

8949 or on an attached statement contain-ordinary income on Form 4797. ing all the same information for each sale inYou cannot deduct losses from wash• If qualified dividends that you re- a similar format. However, if a trader previ-sales unless the loss was incurred in theported on Form 1040, line 9b, or Form ously made the mark-to-market electionordinary course of your business as a dealer1040NR, line 10b, include extraordinary (see below), each transaction is reported inin stock or securities. The basis of the sub-dividends, any loss on the sale or exchange Part II of Form 4797 instead of on Formstantially identical property (or contract orof the stock is a long-term capital loss to the 8949. Regardless of whether a trader re-option to acquire such property) is its costextent of the extraordinary dividends. An ports his or her gains and losses on Formincreased by the disallowed loss (except inextraordinary dividend is a dividend that 8949 or Form 4797, the gain or loss fromthe case of (4) above).equals or exceeds 10% (5% in the case of the disposition of securities is not taken

preferred stock) of your basis in the stock. If you received a Form 1099-B (or sub- into account when figuring net earnings • Amounts received by shareholders in stitute statement), box 5 of that form will from self-employment on Schedule SE. See

show any nondeductible wash sale loss if:corporate liquidations. See Pub. 550. the Instructions for Schedule SE for an ex- ception that applies to section 1256 con-• Cash received in lieu of fractional • The stock or securities sold were cov- tracts.ered securities (defined in the instructionsshares of stock as a result of a stock split or

for Form 8949, column (f), later), andstock dividend. See Pub. 550. The limitation on investment interest expense that applies to investors does not• The substantially identical stock or se-• Load charges to acquire stock in a reg- apply to interest paid or incurred in a trad-curities you bought had the same CUSIPulated investment company (including a ing business. A trader reports interest ex-number as the stock or securities you soldmutual fund), which may not be taken into pense and other expenses (excludingand were bought in the same account as theaccount in determining gain or loss on cer- commissions and other costs of acquiringstock or securities you sold.tain dispositions of the stock if reinvest- or disposing of securities) from a tradingHowever, you cannot deduct a loss from ament rights were exercised. See Pub. 550. business on Schedule C (instead of Sched-wash sale even if it is not reported on Form• The sale or exchange of S corporation ule A).1099-B (or substitute statement). For morestock or an interest in a trust held for more

details on wash sales, see Pub. 550.than 1 year, which may result in col- A trader also may hold securities for investment. The rules for investors gener-lectibles gain (28% rate gain). See the in- Report a wash sale transaction on line 1 ally will apply to those securities. Allocatestructions for line 18 of Schedule D. or line 3 of Form 8949 with the appropriate interest and other expenses between your• Gain or loss on the disposition of se- box checked. Complete all columns. Enter trading business and your investment se-curities futures contracts. See Pub. 550. ‘‘W’’ in column (b). Enter as a positive curities.number in column (g) the amount of the• Gain on the constructive sale of cer-

loss not allowed. See the instructions for Mark-To-Market Election fortain appreciated financial positions. See Form 8949, columns (b) and (g), later.Pub. 550. Traders

• Certain constructive ownership trans- A trader may make an election under sec-Traders in Securitiesactions. Gain in excess of the gain you tion 475(f) to report all gains and losses would have recognized if you had held a You are a trader in securities if you are from securities held in connection with a financial asset directly during the term of a engaged in the business of buying and sell- trading business as ordinary income (or derivative contract must be treated as ordi- ing securities for your own account. To be loss), including those from securities held nary income. See section 1260. If any por- engaged in business as a trader in securi- at the end of the year. Securities held at the

ties, all of the following statements must betion of the constructive ownership end of the year are “marked to market” by true.transaction was open in any prior year, you treating them as if they were sold (and reac-

quired) for fair market value on the lastmay have to pay interest. See section • You must seek to profit from daily business day of the year. Generally, the1260(b) for details, including how to figure market movements in the prices of securi- election must be made by the due date (notthe interest. Include the interest as an addi- ties and not from dividends, interest, or including extensions) of the tax return fortional tax on Form 1040, line 60 (or Form capital appreciation. the year prior to the year for which the1040NR, line 59). Write “Section 1260(b) • Your activity must be substantial. election becomes effective. To be effectiveinterest” and the amount of the interest to • You must carry on the activity with for 2011, the election must have been madethe left of line 60 (or Form 1040NR, line

continuity and regularity. by April 18, 2011.59). This interest is not deductible. • Gain or loss from the disposition of The following facts and circumstances Starting with the year the election be-

stock or other securities in an investment should be considered in determining if your comes effective, a trader reports all gains club. See Pub. 550. activity is a business. and losses from securities held in connec-

D-4

tion with the trading business, including If a call option you sold was exercised company changes to a stock company. If securities held at the end of the year, in Part and the option premium you received was you were a policyholder or annuitant of the II of Form 4797. If you previously made not reflected in the sales price shown on the mutual company, you may have received the election, see the Instructions for Form Form 1099-B (or substitute statement) you either stock in the stock company or cash in 4797. For details on making the received, enter the premium as a positive exchange for your equity interest in the mu- mark-to-market election for 2012, see Pub. number in column (g) of Form 8949. Enter tual company. The basis of your equity in- 550 or Rev. Proc. 99-17, 1999-1 C.B. 503. “O” in column (b). terest in the mutual company is considered You can find Rev. Proc. 99-17 starting on to be zero.Example. For $10, you sold Joe an op- the bottom of page 52 of Internal Revenue tion to buy one share of XYZ stock for $80. If the demutualization transaction quali- Bulletin 1999-7 at www.irs.gov/pub/ Joe later exercised the option. Enter $80 in fies as a tax-free reorganization, no gain is irs-irbs/irb99-07.pdf. column (e) of Form 8949. Enter “O” in recognized on the exchange of your equity

column (b) and $10 in column (g). Com-If you hold securities for investment, interest in the mutual company for stock. plete the other columns according to theyou must identify them as such in your The company can advise you if the transac- instructions.records on the day you acquired them (for tion is a tax-free reorganization. Because

example, by holding the securities in a sep- the basis of your equity interest in the mu-Undistributed Capital Gainsarate brokerage account). Securities held tual company is considered to be zero, your for investment are not marked-to-market. basis in the stock received is zero. YourInclude on Schedule D, line 11, the amount

holding period for the new stock includesfrom box 1a of Form 2439. This representsShort Sales the period you held an equity interest in theyour share of the undistributed long-term mutual company. If you received cash incapital gains of the regulated investmentA short sale is a contract to sell property exchange for your equity interest, you mustcompany (including a mutual fund) or realyou borrowed for delivery to a buyer. At a recognize a capital gain in an amount equalestate investment trust.later date, you either buy substantially to the cash received. If you held the equityidentical property and deliver it to the If there is an amount in box 1b, include interest for more than 1 year, report thelender or deliver property that you held but that amount on line 11 of the Unrecaptured gain as a long-term capital gain on line 3 ofdid not want to transfer at the time of the Section 1250 Gain Worksheet if you com- Form 8949. If you held the equity interestsale. plete line 19 of Schedule D. for 1 year or less, report the gain as aExample. You think the value of XYZ

If there is an amount in box 1c, see short-term capital gain on line 1 of Formstock will drop. You borrow 10 shares from Exclusion of Gain on Qualified Small Busi- 8949. Be sure the appropriate box isyour broker and sell them for $100. This is ness (QSB) Stock, later. checked at the top of Form 8949.a short sale. You later buy 10 shares for $80 If there is an amount in box 1d, includeand deliver them to your broker to close the If the demutualization transaction does

that amount on line 4 of the 28% Rate Gainshort sale. Your gain is $20 ($100 − $80). not qualify as a tax-free reorganization, you Worksheet if you complete line 18 of must recognize a capital gain in an amountHolding period. Usually, your holding pe- Schedule D. equal to the cash and fair market value ofriod is the amount of time you actually held

the stock received. If you held the equityInclude on Form 1040, line 71, or Formthe property eventually delivered to the interest for more than 1 year, report the1040NR, line 67, the tax paid as shown inlender to close the short sale. However, gain as a long-term capital gain on line 3 ofbox 2 of Form 2439. Also check the box foryour gain when closing a short sale is short Form 8949. If you held the equity interestForm 2439. Add to the basis of your stockterm if you (a) held substantially identical for 1 year or less, report the gain as athe excess of the amount included in in-property for 1 year or less on the date of the short-term capital gain on line 1 of Formcome over the amount of the credit for theshort sale, or (b) acquired property substan- 8949. Be sure the appropriate box istax paid. See Pub. 550 for details.tially identical to the property sold short checked at the top of Form 8949. Yourafter the short sale but on or before the date Installment Sales holding period for the new stock begins onyou close the short sale. If you held sub- the day after you received the stock.stantially identical property for more than 1 If you sold property (other than publicly

year on the date of a short sale, any loss traded stocks or securities) at a gain and Exclusion of Gain onrealized on the short sale is a long-term you will receive a payment in a tax year Qualified Small Businesscapital loss, even if the property used to after the year of sale, you generally must

close the short sale was held 1 year or less. report the sale on the installment method (QSB) Stock unless you elect not to. Use Form 6252 toReporting a short sale. Report any short Section 1202 allows for an exclusion of upreport the sale on the installment method.sale on Form 8949 in the year it closes. to 50% of the eligible gain on the sale orAlso use Form 6252 to report any payment exchange of QSB stock. The section 1202If a short sale closed in 2011 but you did received in 2011 from a sale made in an exclusion applies only to QSB stock heldnot get a 2011 Form 1099-B (or substitute earlier year that you reported on the install- for more than 5 years. The exclusion can bestatement) for it because you entered into it ment method. up to 60% for certain empowerment zonebefore 2011, report it on a Form 8949 with

To elect out of the installment method, business stock. See Empowerment Zonebox C checked. In column (a), enter (for report the full amount of the gain on Form Business Stock, later.example) “100 sh. XYZ Co.–2010 short 8949 on a timely filed return (includingsale closed.” To be QSB stock, the stock must meetextensions) for the year of the sale. If your all of the following tests.original return was filed on time, you canGain or Loss From Options make the election on an amended return 1. It must be stock in a C corporationReport on Form 8949 gain or loss from the filed no later than 6 months after the due (that is, not S corporation stock).closing or expiration of an option that is not date of your return (excluding extensions). 2. It must have been originally issueda section 1256 contract but is a capital asset Write “Filed pursuant to section after August 10, 1993.in your hands. If an option you purchased 301.9100-2” at the top of the amended re-expired, enter the expiration date in column 3. As of the date the stock was issued,turn.(d) and enter “EXPIRED” in column (e). If the corporation was a domestic C corpora-

an option that was granted (written) ex- tion with total gross assets of $50 million orDemutualization of Life pired, enter the expiration date in column less (a) at all times after August 9, 1993,Insurance Companies(c) and enter “EXPIRED” in column (f). and before the stock was issued, and (b) Fill in the other columns as appropriate. Demutualization of a life insurance com- immediately after the stock was issued. See Pub. 550 for details. pany occurs when a mutual life insurance Gross assets include those of any predeces-

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sor of the corporation. All corporations that 2. You acquired the stock after Decem- you excluded 60% of the gain, enter 2⁄3 of are members of the same parent-subsidiary ber 21, 2000. the exclusion. controlled group are treated as one corpora- Gain from an installment sale of QSBtion. Requirement 1 will still be met if the stock. If all payments are not received in

corporation ceased to qualify after the4. You must have acquired the stock at the year of sale, a sale of QSB stock that is 5-year period that began on the date youits original issue (either directly or through not traded on an established securities mar- acquired the stock. However, the gain thatan underwriter), either in exchange for ket generally is treated as an installment qualifies for the 60% exclusion cannot bemoney or other property or as pay for serv- sale and is reported on Form 6252. Figure more than the gain you would have had ifices (other than as an underwriter) to the the allowable section 1202 exclusion for you had sold the stock on the date the cor-corporation. In certain cases, you may meet the year by multiplying the total amount of poration ceased to qualify.this test if you acquired the stock from an- the exclusion by a fraction, the numerator

other person who met the test (such as by of which is the amount of eligible gain to beFor more information about empower- gift or inheritance) or through a conversion recognized for the tax year and the denomi-ment zone businesses, see section 1397C. or exchange of QSB stock you held. nator of which is the total amount of eligi-

Pass-Through Entities ble gain. In column (a) of Form 8949, line5. During substantially all the time you 3, enter the name of the corporation whoseheld the stock: If you held an interest in a pass-through stock was sold. In column (b), enter “S”entity (a partnership, S corporation, or mu-a. The corporation was a C corporation, and in column (g) enter the amount of thetual fund or other regulated investmentb. At least 80% of the value of the allowable exclusion for the year as a nega-company) that sold QSB stock, to qualifycorporation’s assets were used in the active tive number. See the instructions for Formfor the exclusion you must have held theconduct of one or more qualified busi- 8949, columns (b) and (g), later. If you areinterest on the date the pass-through entitynesses (defined below), and completing line 18 of Schedule D, enter asacquired the QSB stock and at all times

c. The corporation was not a foreign a positive number the amount of your al-thereafter until the stock was sold. corporation, DISC, former DISC, regulated lowable exclusion for the year on line 2 of

How To Reportinvestment company, real estate invest- the 28% Rate Gain Worksheet; if you ex- ment trust, REMIC, FASIT, cooperative, or cluded 60% of the gain, enter 2⁄3 of theReport the sale or exchange of the QSB a corporation that has made (or that has a allowable exclusion for the year.stock on Form 8949, Part II, with the appro- subsidiary that has made) a section 936 priate box checked, as you would if you Alternative minimum tax. You must enterelection. were not taking the exclusion. Then enter 7% of your allowable exclusion for the year

“S” in column (b) and enter the amount of on line 13 of Form 6251. the excluded gain as a negative number inSSBIC. A specialized small column (g). Put it in parentheses to show it Rollover of Gain From QSBbusiness investment company is negative. See the instructions for Form(SSBIC) is treated as having Stock

TIP 8949, columns (b) and (g). Complete allmet test 5b.

If you sold QSB stock (defined earlier) thatremaining columns. If you are completing you held for more than 6 months, you canDefinition of qualified business. A quali- line 18 of Schedule D, enter as a positive elect to postpone gain if you buy other QSBfied business is any business that is not one number the amount of your allowable ex- stock during the 60-day period that beganof the following. clusion on line 2 of the 28% Rate Gain on the date of the sale. A pass-through en-Worksheet; if you excluded 60% of the• A business involving services per- tity also can make the election to postponegain, enter 2⁄3 of the exclusion.formed in the fields of health, law, engi- gain. The benefit of the postponed gain ap-neering, architecture, accounting, actuarial

Gain from Form 1099-DIV. If you re- plies to your share of the entity’s postponedscience, performing arts, consulting, athlet- ceived a Form 1099-DIV with a gain in box gain if you held an interest in the entity forics, financial services, or brokerage serv- 2c, part or all of that gain (which is also the entire period the entity held the QSBices. included in box 2a) may be eligible for the stock. If a pass-through entity sold QSB• A business whose principal asset is section 1202 exclusion. In column (a) of stock held for more than 6 months and you

the reputation or skill of one or more em- Form 8949, line 3, enter the name of the held an interest in the entity for the entire ployees. corporation whose stock was sold. In col- period the entity held the stock, you also

• A banking, insurance, financing, leas- umn (b), enter “S” and in column (g) enter can elect to postpone gain if you, rather ing, investing, or similar business. the amount of the excluded gain as a nega- than the pass-through entity, buy the re-

tive number. See the instructions for Form placement QSB stock within the 60-day pe-• A farming business (including the 8949, columns (b) and (g), later. If you are riod. If you were a partner in a partnershipraising or harvesting of trees). completing line 18 of Schedule D, enter as that sold or bought QSB stock, see box 11• A business involving the production a positive number the amount of your al- of the Schedule K-1 (Form 1065) sent toof products for which percentage depletion lowable exclusion on line 2 of the 28% you by the partnership and Regulations sec-can be claimed. Rate Gain Worksheet; if you excluded 60% tion 1.1045-1.• A business of operating a hotel, motel, of the gain, enter 2⁄3 of the exclusion. You must recognize gain to the extentrestaurant, or similar business.

the sale proceeds are more than the cost ofGain from Form 2439. If you received aFor more details about limits and addi- the replacement stock. Reduce the basis ofForm 2439 with a gain in box 1c, part or alltional requirements that may apply, see the replacement stock by any postponedof that gain (which is also included in boxPub. 550 or section 1202. gain.1a) may be eligible for the section 1202 exclusion. In column (a) of Form 8949, line You must make the election no laterEmpowerment Zone Business 3, enter the name of the corporation whose than the due date (including extensions) forStock stock was sold. In column (b), enter “S” filing your tax return for the tax year inYou generally can exclude up to 60% of and in column (g) enter the amount of the which the QSB stock was sold. If your orig-your gain if you meet the following addi- excluded gain as a negative number. See inal return was filed on time, you can maketional requirements. the instructions for Form 8949, columns (b) the election on an amended return filed no

1. The stock you sold or exchanged was and (g), later. If you are completing line 18 later than 6 months after the due date of stock in a corporation that qualified as an of Schedule D, enter as a positive number your return (excluding extensions). Write empowerment zone business during sub- the amount of your allowable exclusion on “Filed pursuant to section 301.9100-2” at stantially all of the time you held the stock. line 2 of the 28% Rate Gain Worksheet; if the top of the amended return.

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To make the election, report the sale on a. You acquired the stock or partnership 8949, columns (b) and (g), later. Complete interest after December 21, 2000, solely in all remaining columns.line 1 or line 3 of Form 8949 as you would exchange for cash, from the corporation atif you were not making the election. Then

Exclusion of Gain Fromits original issue (directly or through anenter “R” in column (b). Enter the amount underwriter) or from the partnership;of the postponed gain as a negative number Qualified Community Assets

in column (g). Put it in parentheses to show b. The business was an enterprise zone If you sold or exchanged a qualified com- it is negative. See the instructions for Form business (or a new business being organ- munity asset that you acquired after 2001 8949, columns (b) and (g), later. Complete ized as an enterprise zone business) as of and before 2010 and held for more than 5 all remaining columns. the time you acquired the stock or partner- years, you may be able to exclude the quali-

ship interest; and fied capital gain that you would otherwise Rollover of Gain From include in income. The exclusion applies toc. The business qualified as an enter-

an interest in, or property of, certain re-prise zone business during substantially allEmpowerment Zone Assets newal community businesses.of the time you held the stock or partner-

If you sold a qualified empowerment zone ship interest. Qualified community asset. A qualifiedasset that you held for more than 1 year, community asset is any of the following.you may be able to elect to postpone part or See section 1397B for more details.

all of the gain that you would otherwise • Qualified community stock. How to report. Report the sale on Forminclude in income. If you make the elec- • Qualified community partnership in-8949, line 3, as you would if you were nottion, the gain on the sale generally is recog- terest.making the election. Then enter “R” in col-nized only to the extent, if any, that the • Qualified community business prop-umn (b), and enter the amount of the post-amount realized on the sale is more than the

erty.poned gain as a negative number in columncost of qualified empowerment zone assets (g). Put it in parentheses to show it is nega-(replacement property) you purchased dur- Qualified capital gain. Qualified capital tive. See the instructions for Form 8949,ing the 60-day period beginning on the date gain is any gain recognized on the sale or columns (b) and (g), later. Complete allof the sale. The following rules apply. exchange of a qualified community asset remaining columns. but does not include any of the following.• No portion of the cost of the replace-

• Gain treated as ordinary income underment property may be taken into account to Exclusion of Gain From DC section 1245.the extent the cost is taken into account to Zone Assetsexclude gain on a different empowerment • Section 1250 gain figured as if section

If you sold or exchanged a District of Co-zone asset. 1250 applied to all depreciation rather than lumbia Enterprise Zone (DC Zone) asset the additional depreciation.• The replacement property must qual- that you acquired after 1997 and held forify as an empowerment zone asset with re- • Gain attributable to real property, or more than 5 years, you may be able to ex-spect to the same empowerment zone as the an intangible asset, that is not an integral clude the amount of qualified capital gainasset sold. part of a qualified community business. that you would otherwise include in in-• You must reduce the basis of the re- • Gain from a related-party transaction.come. The exclusion applies to an interest

placement property by the amount of post- See Sales and Exchanges Between Relatedin, or property of, certain businesses oper- poned gain. Persons in chapter 2 of Pub. 544.ating in the District of Columbia.

• This election does not apply to any See section 1400F for more details and DC Zone asset. A DC Zone asset is any ofgain (a) treated as ordinary income or (b) special rules.the following.attributable to real property, or an intangi-

How to report. Report the sale or ex-• DC Zone business stock.ble asset, that is not an integral part of an change on Form 8949, Part II, with theenterprise zone business. • DC Zone partnership interest. appropriate box checked, as you would if• The District of Columbia enterprise • DC Zone business property. you were not taking the exclusion. Then

zone is not treated as an empowerment enter “X” in column (b) and enter theQualified capital gain. Qualified capitalzone for this purpose. amount of the exclusion as a negative num-gain is any gain recognized on the sale or• The election is irrevocable without ber in column (g). Put it in parentheses toexchange of a DC Zone asset that is a capi- IRS consent. show it is negative. See the instructions fortal asset or property used in a trade or busi-

Form 8949, columns (b) and (g), later.ness. It does not include any of theSee section 1397C for the definition of Complete all remaining columns.following gains.empowerment zone and enterprise zone • Gain treated as ordinary income underbusiness. You can find out if your business Rollover of Gain From

section 1245.is located within an empowerment zone by Publicly Traded Securities using the RC/EZ/EC Address Locator at • Section 1250 gain figured as if section

You can postpone all or part of any gainwww.hud.gov/crlocator. 1250 applied to all depreciation rather than from the sale of publicly traded securitiesthe additional depreciation.

Qualified empowerment zone assets by buying common stock or a partnership• Gain attributable to real property, orare: interest in a specialized small business in- an intangible asset, that is not an integral vestment company during the 60-day pe-1. Tangible property, if: part of a DC Zone business. riod that began on the date of the sale. See

• Gain from a related-party transaction.a. You acquired the property after De- Pub. 550. Also see How To Complete Form See Sales and Exchanges Between Relatedcember 21, 2000, 8949, Columns (b) and (g), later. Persons in chapter 2 of Pub. 544.b. The original use of the property in the Rollover of Gain From Stockempowerment zone began with you, and See section 1400B for more details.

Sold to ESOPs or Certainc. Substantially all of the use of the How to report. Report the sale or ex- Cooperativesproperty, during substantially all of the change on Form 8949, line 3, as you would time that you held it, was in your enterprise if you were not taking the exclusion. Then You can postpone all or part of any gain zone business; and enter “X” in column (b). Enter the amount from the sale of qualified securities, held

2. Stock in a domestic corporation or a of the exclusion as a negative number in for at least 3 years, to an employee stock capital or profits interest in a domestic part- column (g). Put it in parentheses to show it ownership plan (ESOP) or eligible nership, if: is negative. See the instructions for Form worker-owned cooperative, if you buy

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qualified replacement property. See Pub. other basis. Check box B at the top of this Canadian registered retirement plan, enter 550. Also see How To Complete Form page of Form 8949. If your substitute state- any amount from Form 8891, line 10d, on 8949, Columns (b) and (g), later. ment shows cost or other basis for the trans- line 1 or line 3 (whichever applies) of a

action but indicates it was not reported to Form 8949 that has box C checked at the the IRS, report that transaction on page 2 of top. Enter “Form 8891” in column (a). a Form 8949 with box B, not box A, Enter the line 10d amount in column (e).Specific Instructions checked.

Other gains or losses where sales price or 3. Long-term transactions for which you basis is not known. If you have anotherForm 8949

did not receive a Form 1099-B (or substi- gain or loss for which you do not know theEnter all sales and exchanges of capital as- tute statement). Check box C at the top of sales price or basis (such as a long-termsets, including stocks, bonds, etc., and real page 2 of this Form 8949. capital gain from Form 8621), enter aestate (if not reported on Form 4684, 4797, description of the gain or loss in column (a)6252, 6781, or 8824). Include these trans- Include on each Form 8949 only trans- of a Form 8949 that has box C checked atactions even if you did not receive a Form actions described in the text for the box you the top. If you have a gain, enter it in col-1099-B or 1099-S (or substitute statement) check (A, B, or C). If you have more than umn (e). If you have a loss, enter it infor the transaction. Report short-term gains one type of transaction (A, B, or C), com- column (f). Complete any other columnsor losses on line 1. Report long-term gains plete a separate Form 8949 for each. Check you can.and losses on line 3. only one box on each Form 8949. For ex- Rounding off to whole dollars. You canample, if you check box A in Part I of oneEnter the details of each transaction on a round off cents to whole dollars on yourForm 8949, include on that Form 8949 onlyseparate line of Form 8949 (unless the Ex- Form 8949. If you do round to whole dol-short-term gains and losses from transac-ception to reporting each transaction on a lars, you must round all amounts. To round,tions your broker reported to you on a Formseparate line described later applies to drop amounts under 50 cents and increase1099-B (or substitute statement) showingyou). Use as many Forms 8949 as you amounts from 50 to 99 cents to the nextthat basis was reported to the IRS. If youneed. dollar. For example, $1.39 becomes $1 andhave other types of transactions, reportUse a separate Form 8949, Part I, for $2.50 becomes $3.those on a separate Form 8949 and checkeach of the following types of transactions. the box that applies. Column (a)—Description of1. Short-term transactions reported to Enter on Schedule D the combined Propertyyou on Form 1099-B (or substitute state- totals from all your Forms 8949. Form You can use stock ticker symbols or abbre-ment) with an amount shown for cost or 8949 and Schedule D explain exactly how viations to describe the property as long asother basis unless the statement indicates to do this. they are based on the descriptions of thethat amount was not reported to the IRS.

Exception to reporting each transaction on property as shown on Form 1099-B orCheck box A at the top of this page of Form a separate line. Instead of reporting each 1099-S (or substitute statement).8949. If your substitute statement shows of your transactions on a separate line ofcost or other basis for the transaction but If you inherited the property from some- Form 8949, you can report them on an at-indicates it was not reported to the IRS, one who died in 2010 and the executor of tached statement containing all the samereport that transaction on page 1 of a Form the decedent’s estate made the election to information as Form 8949 and in a similar8949 with box B, not box A, checked (see 2 file Form 8939, also enter “INH-2010” in format. Use as many attached statements asbelow). column (a). you need. Enter the combined totals from2. Short-term transactions reported to

Column (b)—Codeall your attached statements on a Formyou on Form 1099-B (or substitute state- 8949 with the appropriate box checked. Forment) without an amount shown for cost or In order to explain any adjustment to gain example, report on line 3 of a Form 8949other basis. Check box B at the top of this or loss in column (g), put the appropriate with box A checked all long-term gains andpage of Form 8949. If your substitute state- code in column (b). See How To Complete losses from transactions your broker re-ment shows cost or other basis for the trans- Form 8949, Columns (b) and (g), later. ported to you on a statement showing thataction but indicates it was not reported to Also see the instructions for column (g). If the basis of the property sold was reportedthe IRS, report that transaction on page 1 of more than one code applies, enter all the to the IRS. If you have statements froma Form 8949 with box B, not box A, codes that apply. Separate them by a space more than one broker, report the totals fromchecked. or a comma. each broker on a separate line.3. Short-term transactions for which Column (c)—Date Acquired

Do not enter “available upon request”you did not receive a Form 1099-B (or sub- Enter in this column the date you acquiredand summary totals in lieu of reporting thestitute statement). Check box C at the top of the asset. Use the trade date for stocks anddetails of each transaction on Form(s) 8949page 1 of this Form 8949. bonds traded on an exchange oror attached statements. over-the-counter market. For stock or otherUse a separate Form 8949, Part II, for

E-file. If you e-file your return but choose property sold short, enter the date you ac-each of the following types of transactions. not to include your transactions on the elec- quired the stock or property delivered to the

1. Long-term transactions reported to tronic short-term capital gain (or loss) or broker or lender to close the short sale. you on Form 1099-B (or substitute state- long-term capital gain (or loss) records,

The date acquired for an asset you heldment) with an amount shown for cost or you must attach Form 8949 (or a statement on January 1, 2001, for which you made another basis unless the statement indicates with the same information) to Form 8453 election to recognize any gain in a deemedthat amount was not reported to the IRS. and mail the forms to the IRS. sale is the date of the deemed sale andCheck box A at the top of this page of Form

Charitable gift annuity. If you are the ben- reacquisition.8949. If your substitute statement shows eficiary of a charitable gift annuity and re-cost or other basis for the transaction but If you disposed of property that you ac-ceive a Form 1099-R showing an amount inindicates it was not reported to the IRS, quired by inheritance from someone whobox 3, report the box 3 amount on line 3 ofreport that transaction on page 2 of a Form died before or after 2010, report the sale ora Form 8949 that has box C checked at the8949 with box B, not box A, checked (see 2 exchange on l ine 3 and en te rtop. Enter “Form 1099-R” in column (a).below). “INHERITED” in column (c) instead of theEnter the box 3 amount in column (e).

2. Long-term transactions reported to date you acquired the property. Also report you on Form 1099-B (or substitute state- Canadian registered retirement plan. If the sale or exchange that way if you inher- ment) without an amount shown for cost or you are the beneficiary or annuitant of a ited the property from someone who died in

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2010 and the executor of the decedent’s the asset is its closing market price or fair your broker. Generally, a covered security estate did not elect to file Form 8939. If you market value, whichever applies, on the is a security other than: inherited the property from someone who date of the deemed sale and reacquisition, • A security you acquired before Janu- died in 2010 and the executor made the whether the deemed sale resulted in a gain ary 1, 2011, election to file Form 8939, also see the or an unallowed loss. • Stock in a mutual fund or other regu-instructions for column (a) and see Pub. You can use the average basis method to lated investment company, or4895 to see whether you should report the determine the basis of shares of stock if the • Stock you acquired through a divi-sale or exchange on line 1 or line 3. shares are identical to each other, you ac- dend reinvestment plan.

If you sold a block of stock (or similar quired them at different prices and left If box 6 on Form 1099-B is checked, theproperty) that you acquired through several them in an account with a custodian or

property sold was not a covered security.different purchases, you may report the sale agent, and either: on one line and enter “VARIOUS” in col- Enter the basis shown on Form 1099-B• They are shares in a mutual fund (or umn (c). However, you still must report the in column (f). If the basis shown on Formother RIC), or short-term gain or (loss) on the sale in Part I 1099-B is not correct, see How To Com-• You acquired them after 2010 in con-and the long-term gain or (loss) in Part II. plete Form 8949, Columns (b) and (g),nection with a dividend reinvestment plan

later, for the adjustment you must make.Column (d)—Date Sold (DRP). If no basis is shown on Form 1099-B (orShares are identical if they have the sameEnter in this column the date you sold the

substitute statement), enter the correct basisCUSIP number, except that shares of stockasset. Use the trade date for stocks and of the property in column (f).in a DRP are not identical to shares of stockbonds traded on an exchange or

that are not in a DRP, even if they have theover-the-counter market. For stock or other Column (g)—Adjustments to Gain same CUSIP number. If you are using theproperty sold short, enter the date you de- or Loss average basis method and received a Formlivered the stock or property to the broker Enter in this column any necessary adjust-1099-B (or substitute statement) that showsor lender to close the short sale. ments to gain or loss. Enter negativean incorrect basis, enter “B” in column (b),

Column (e)—Sales Price amounts in parentheses. Also enter a codeenter the basis shown on Form 1099-B (or in column (b) to explain the adjustment.substitute statement) in column (f), and seeIf you sold stocks or bonds and you re- See How To Complete Form 8949, Col-How To Complete Form 8949, Columnsceived a Form 1099-B (or substitute state- umns (b) and (g), later.(b) and (g), later. For details on making thement) from your broker that shows gross

election and how to figure average basis, Include in this column any expense ofsales price, enter that amount in column (e). see Pub. 550. sale, such as broker’s fees, commissions,But if Form 1099-B (or substitute state-

state and local transfer taxes, and optionment) indicates that gross proceeds minus The basis of property acquired by gift is premiums, unless you reported the net salescommissions and option premiums were generally the basis of the property in the price in column (e). If you include any ex-reported to the IRS, enter that net amount in hands of the donor. The basis of property pense of sale in this column, enter “O” incolumn (e). acquired from a decedent who died before column (b).or after 2010 is generally the fair marketYou should not have received a Form

value at the date of death. This is also the1099-B (or substitute statement) for a trans- More than one code. If you entered more basis of property acquired from a decedentaction merely representing the return of than one code in column (b) on the same who died in 2010 if the executor of theyour original investment in a nontransfer- line, enter the net adjustment in column (g). decedent’s estate did not elect to file Formable obligation, such as a savings bond or a For example, if one adjustment is $5,000 8939. See Pub. 551 for details. If you soldcertificate of deposit. But if you did, report and another is ($1,000), enter $4,000 property that you inherited from someonethe amount shown on Form 1099-B (or ($5,000 − $1,000). who died in 2010 and the executor madesubstitute statement) in both columns (e) Example. You sold your main home in the election to file Form 8939, see Pub.and (f). 2011 for $320,000 and received a Form 4895. 1099-S showing the $320,000 gross pro-Column (f)—Cost or Other Basis

Increase the cost or other basis of an ceeds. The home’s basis was $100,000.In general, the cost or other basis is the cost original issue discount (OID) debt instru- You had selling expenses of $20,000.of the property plus purchase commissions ment by the amount of OID that has been Under the tests described in Sale of Yourand improvements, minus depreciation, included in gross income for that instru- Home, earlier, you can exclude the entireamortization, and depletion. If you inher- ment. See Pub. 550 for details. $200,000 gain from income. On Formited the property, got it as a gift, or received 8949, Part II, check box C at the top. OnIf a charitable contribution deduction isit in a tax-free exchange or involuntary line 3, complete columns (a), (c), and (d).allowable because of a bargain sale ofconversion or in connection with a “wash Enter $320,000 in column (e) and $100,000property to a charitable organization, thesale,” you may not be able to use the actual in column (f). Enter “H” in column (b). Inadjusted basis for purposes of determiningcost as the basis. If you do not use the column (g), enter $220,000 (your $200,000gain from the sale is the amount that has theactual cost, attach an explanation of your exclusion + your selling expenses ofsame ratio to the adjusted basis as thebasis. $20,000) as a negative number. Put it inamount realized has to the fair market If you sold stock, adjust your basis by parentheses to show it is negative. If this isvalue. See Pub. 544 for details.

subtracting all the nondividend distribu- your only transaction on this Form 8949, For more details, see Pub. 551.tions you received before the sale. Also enter $320,000 in column (e) on line 10 of

adjust your basis for any stock splits. See Schedule D, $100,000 in column (f), andForm 1099-B. If the property you sold was Pub. 550 for details. $220,000 in column (g). In column (h),a covered security, its basis should be

enter -0- ($320,000 − $100,000 −shown in box 3 of the Form 1099-B (orIf you elected to recognize gain on an $220,000).substitute statement) you received fromasset held on January 1, 2001, your basis in

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How To Complete Form 8949, Columns (b) and (g) For most transactions, you do not need to complete columns (b) and (g) and can leave them blank. You may need to complete columns (b) and (g) if you got a Form 1099-B or 1099-S that is incorrect, if you are excluding or postponing a capital gain, if you have a disallowed loss, or in certain other situations. Details are in the table below.

THEN enter this codeIF . . . AND. . .in column (b) . . .

You received a Form 1099-B (or substitute statement) Enter the basis shown on Form 1099-B (or substitute statement) in and the basis shown in box 3 is incorrect. . . . column (f).

If the correct basis is higher than the basis shown on Form 1099-B (or substitute statement), enter the difference between the two

B amounts as a negative number (in parentheses) in column (g).

If the correct basis is lower than the basis shown on Form 1099-B (or substitute statement), enter the difference between the two amounts as a positive number in column (g).

You received a Form 1099-B (or substitute statement) Enter -0- in column (g) unless an adjustment is required because of and the type of gain or loss (short term or long term) T another code. Report the gain or loss in the correct Part of Form shown in box 8 is incorrect . . . . 8949.

You received a Form 1099-B or 1099-S as a nominee Report the transaction on Form 8949 as you would if you were the for the actual owner of the property. . . . actual owner, but enter any resulting gain as a negative adjustment (in

parentheses) in column (g) or any resulting loss as a positive N adjustment in column (g). However, if you received capital gain

distributions as a nominee, report them instead as described under Capital Gain Distributions, earlier.

You sold or exchanged your main home at a gain, Report the sale or exchange on Form 8949 as you would if you were must report the sale or exchange on Form 8949, and not taking the exclusion. Then enter the amount of excluded

Hcan exclude some or all of the gain. . . . (nontaxable) gain as a negative number (in parentheses) in column (g). See the example in the instructions for Form 8949, column (g).

You sold or exchanged qualified small business stock Report the sale or exchange on Form 8949 as you would if you were and can exclude part of the gain. . . . S not taking the exclusion. Then enter the amount of the exclusion as a

negative number (in parentheses) in column (g).

You can exclude all or part of your gain under the Report the sale or exchange on Form 8949 as you would if you were rules explained earlier in these instructions for DC X not taking the exclusion. Then enter the amount of the exclusion as a Zone assets or qualified community assets. . . . negative number (in parentheses) in column (g).

You are electing to postpone all or part of your gain Report the sale or exchange on Form 8949 as you would if you were under the rules explained earlier in these instructions not making the election. Then enter the amount of postponed gain as for rollover of gain from QSB stock, empowerment R a negative number (in parentheses) in column (g). zone assets, publicly traded securities, or stock sold to ESOPs or certain cooperatives. . . .

You have a nondeductible loss from a wash sale. . . . Enter the amount of the nondeductible loss as a positive number in W column (g). See Wash Sales, earlier, for details.

You have a nondeductible loss other than a loss Enter the amount of the nondeductible loss as a positive number in Lindicated by code W. . . . column (g). See the example under Nondeductible Losses, earlier.

You include any expense of sale or certain option Enter your expenses of sale or the appropriate adjustment amount in premiums in column (g) or you have an adjustment column (g). Enter any expenses of sale as a negative number (in not explained above in this column. . . . parentheses). See the instructions for Form 8949, column (g). If you

O sold a call option and it was exercised, see Gain or Loss From Options, earlier, for information about reporting certain option premiums.

None of the other statements in this column apply. . . Leave columns (b) and (g) blank.

next dollar. For example, $1.39 becomes sales price (column (e)). Then take into ac-Schedule D $1 and $2.50 becomes $3. count any adjustments in column (g). Enter

Complete all necessary pages of Form 8949 the gain or loss in column (h). Enter nega- before you complete line 1, 2, 3, 8, 9, or 10 If you have to add two or more amounts tive amounts in parentheses. of Schedule D. to figure the amount to enter on a line,

include cents when adding the amounts and Example 1. Column (e) is $6,000 andRounding Off to Whole Dollars round off only the total. column (f) is ($2,000). Enter $4,000 in col- You can round off cents to whole dollars on umn (h).Lines 1, 2, 3, 8, 9, and 10, columnyour Schedule D. If you do round to whole

(h)—Gain or Lossdollars, you must round all amounts. To Example 2. Column (e) is $6,000 and round, drop amounts under 50 cents and Figure gain or loss on each line. First, sub- column (f) is ($8,000). Enter ($2,000) in increase amounts from 50 to 99 cents to the tract cost or other basis (column (f)) from column (h).

D-10

Capital Loss Carryover Worksheet—Lines 6 and 14 Keep for Your Records

28% Rate Gain Worksheet—Line 18 Keep for Your Records

Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 39, if applicable) is less than zero. Otherwise, you do not have any carryovers.

If you and your spouse once filed a joint return and are filing separate returns for 2011, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss.

1. Enter the amount from your 2010 Form 1040, line 41, or your 2010 Form 1040NR, line 39. If a loss, enclose the amount in parentheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter the loss from your 2010 Schedule D, line 21, as a positive amount . . . . . . . . . . . . . . . . . . . . . 2. 3. Combine lines 1 and 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter the smaller of line 2 or line 3 . . . . . . . . . . . . . . . . . . 4.

If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9.

5. Enter the loss from your 2010 Schedule D, line 7, as a positive amount . . . . . . . . . . . . . . . . . . . . . . 5. 6. Enter any gain from your 2010 Schedule D, line 15. If a loss,

enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Add lines 4 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 8. Short-term capital loss carryover for 2011. Subtract line 7 from line 5. If zero or less, enter -0-. If

more than zero, also enter this amount on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13.

9. Enter the loss from your 2010 Schedule D, line 15, as a positive amount . . . . . . . . . . . . . . . . . . . . . 9. 10. Enter any gain from your 2010 Schedule D, line 7. If a loss,

enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . 11. 12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Long-term capital loss carryover for 2011. Subtract line 12 from line 9. If zero or less, enter -0-. If

more than zero, also enter this amount on Schedule D, line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

Example 3. Column (e) is $6,000, col- Exclusion of Gain on Qualified Small Busi- coholic beverages, and certain other tangi- umn (f) is ($2,000), and column (g) is ness (QSB) Stock, earlier). ble property. ($1,000). Enter $3,000 in column (h). • You reported in Part II of Form 8949 a

collectibles gain or (loss). A collectibles Include on the worksheet any gain (but Line 18 gain or (loss) is any long-term gain or de- not loss) from the sale or exchange of an

ductible long-term loss from the sale or interest in a partnership, S corporation, orIf you checked “Yes” on line 17, complete exchange of a collectible that is a capitalthe 28% Rate Gain Worksheet in these in- trust held for more than 1 year and attribu- asset.structions if either of the following apply table to unrealized appreciation of col-

for 2011. lectibles. For details, see Regulations section 1.1(h)-1. Also, attach the statementCollectibles include works of art, rugs,• You reported in Part II of Form 8949 a required under Regulations section antiques, metals (such as gold, silver, andsection 1202 exclusion from the eligible

platinum bullion), gems, stamps, coins, al- 1.1(h)-1(e).gain on qualified small business stock (see

1. Enter the total of all collectibles gain or (loss) from items you reported on Form 8949, line 3 . . . . . . . . . . . . . . . . . . 1. 2. Enter as a positive number the amount of any section 1202 exclusion you reported in column (g) of Form 8949, line 3,

with code “S” in column (b), for which you excluded 50% of the gain, plus 2⁄3 of any section 1202 exclusion you reported in column (g) of Form 8949, line 3, with code “S” in column (b), for which you excluded 60% of the gain . . . 2.

3. Enter the total of all collectibles gain or (loss) from Form 4684, line 4 (but only if Form 4684, line 15, is more than zero); Form 6252; Form 6781, Part II; and Form 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Enter the total of any collectibles gain reported to you on: • Form 1099-DIV, box 2d; } . . . . . . . . . . . . . . . . . . . . 4.• Form 2439, box 1d; and • Schedule K-1 from a partnership, S corporation, estate, or trust.

5. Enter your long-term capital loss carryovers from Schedule D, line 14, and Schedule K-1 (Form 1041), 5. ( )box 11, code C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. If Schedule D, line 7, is a (loss), enter that (loss) here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. ( ) 7. Combine lines 1 through 6. If zero or less, enter -0-. If more than zero, also enter this amount on

Schedule D, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

D-11

Unrecaptured Section 1250 Gain Worksheet—Line 19 Keep for Your Records

partnership that owned section 1250 prop- the comparable line of Form 4797 for theLine 19 erty. year of sale) for the property. The result is

If you checked “Yes” on line 17, complete your total unrecaptured section 1250 gainInstructions for the Unrecapturedthe Unrecaptured Section 1250 Gain Work- that must be allocated to the installment Section 1250 Gain Worksheetsheet in these instructions if any of the fol- payments received from the sale.

lowing apply for 2011. Lines 1 through 3. If you had more than Step 3. Generally, the amount of sec- one property described on line 1, complete• You sold or otherwise disposed of tion 1231 gain on each installment payment lines 1 through 3 for each property on asection 1250 property (generally, real prop- is treated as unrecaptured section 1250 gain separate worksheet. Enter the total of theerty that you depreciated) held more than 1 until the total unrecaptured section 1250 line 3 amounts for all properties on line 3year. gain figured in step 2 has been used in full. and go to line 4. Figure the amount of gain treated as unre-• You received installment payments

captured section 1250 gain for installmentfor section 1250 property held more than 1 Line 4. To figure the amount to enter on payments received in 2011 as the smaller ofyear for which you are reporting gain on the line 4, follow the steps below for each in- (a) the amount from line 26 or line 37 ofinstallment method. stallment sale of trade or business property your 2011 Form 6252, whichever applies,• You received a Schedule K-1 from an held more than 1 year. or (b) the amount of unrecaptured sectionestate or trust, partnership, or S corporation Step 1. Figure the smaller of (a) the de- 1250 gain remaining to be reported. Thisthat shows “unrecaptured section 1250 preciation allowed or allowable, or (b) the amount is generally the total unrecapturedgain.” total gain for the sale. This is the smaller of section 1250 gain for the sale reduced by all• You received a Form 1099-DIV or line 22 or line 24 of your 2011 Form 4797 gain reported in prior years (excluding sec-

Form 2439 from a real estate investment (or the comparable lines of Form 4797 for tion 1250 ordinary income recapture). the year of sale) for the property.trust or regulated investment company (in- However, if you chose not to treat all of the

cluding a mutual fund) that reports “unre- Step 2. Reduce the amount figured in gain from payments received after May 6, captured section 1250 gain.” step 1 by any section 1250 ordinary income 1997, and before August 24, 1999, as unre-

• You reported a long-term capital gain recapture for the sale. This is the amount captured section 1250 gain, use only the from the sale or exchange of an interest in a from line 26g of your 2011 Form 4797 (or amount you chose to treat as unrecaptured

If you are not reporting a gain on Form 4797, line 7, skip lines 1 through 9 and go to line 10.

1. If you have a section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form 4797 (but not on Form 6252), enter the smaller of line 22 or line 24 of Form 4797 for that property. If you did not have any such property, go to line 4. If you had more than one such property, see instructions . . . . . . . . . . 1.

2. Enter the amount from Form 4797, line 26g, for the property for which you made an entry on line 1 . . . . . . . . 2. 3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 from installment

sales of trade or business property held more than 1 year (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Enter the total of any amounts reported to you on a Schedule K-1 from a partnership or an S corporation as

“unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Enter the smaller of line 6 or the gain from Form 4797, line 7 . . . . . . . . . . . . . . . . . . . 7. 8. Enter the amount, if any, from Form 4797, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to unrecaptured section 1250 gain (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the total of any amounts reported to you as “unrecaptured section 1250 gain” on a Schedule K-1, Form 1099-DIV, or Form 2439 from an estate, trust, real estate investment trust, or mutual fund (or other regulated investment company) or in connection with a Form 1099-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other dispositions of section 1250 property held more than 1 year for which you did not make an entry in Part I of Form 4797 for the year of sale (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. If you had any section 1202 gain or collectibles gain or (loss), enter the total of lines 1

through 4 of the 28% Rate Gain Worksheet. Otherwise, enter -0- . . . . . . . . . . . . . . . . 14. 15. Enter the (loss), if any, from Schedule D, line 7. If Schedule D, line 7, is zero or a gain,

enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. ( ) 16. Enter your long-term capital loss carryovers from Schedule D, line 14, and Schedule K-1

(Form 1041), box 11, code C* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. ( ) 17. Combine lines 14 through 16. If the result is a (loss), enter it as a positive amount. If the result is zero or a

gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. If more than zero,

enter the result here and on Schedule D, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

*If you are filing Form 2555 or 2555-EZ (relating to foreign earned income), see the footnote in the Foreign Earned Income Tax Worksheet in the Form 1040 instructions before completing this line.

D-12

section 1250 gain for those payments to • Step 2. Reduce the amount figured in not make an entry in Part I of Form 4797), reduce the total unrecaptured section 1250 step 1 by any section 1250 ordinary income figure the smaller of (a) the depreciation gain remaining to be reported for the sale. recapture for the sale. This is the amount allowed or allowable, or (b) the total gain Include this amount on line 4. from line 26g of your 2011 Form 4797 (or for the sale. This is the smaller of line 22 or

the comparable line of Form 4797 for the line 24 of Form 4797 for the property.Line 10. Include on line 10 your share of year of sale) for the property. The result is Next, reduce that amount by any sectionthe partnership’s unrecaptured section your total unrecaptured section 1250 gain1250 gain that would result if the partner- 1250 ordinary income recapture for the that must be allocated to the installmentship had transferred all of its section 1250 sale. This is the amount from line 26g of payments received from the sale.property in a fully taxable transaction im- Form 4797 for the property. The result is

mediately before you sold or exchanged • Step 3. Generally, the amount of capi- the total unrecaptured section 1250 gain for your interest in that partnership. If you rec- tal gain on each installment payment is the sale. Include this amount on line 12. ognized less than all of the realized gain, treated as unrecaptured section 1250 gain the partnership will be treated as having until the total unrecaptured section 1250 transferred only a proportionate amount of Line 21gain figured in step 2 has been used in full. each section 1250 property. For details, see Figure the amount of gain treated as unre- You have a capital loss carryover from Regulations section 1.1(h)-1. Also attach captured section 1250 gain for installment 2011 to 2012 if you have a loss on line 16the statement required under Regulations payments received in 2011 as the smaller of and either:section 1.1(h)-1(e). (a) the amount from line 26 or line 37 of • That loss is more than the loss on lineyour 2011 Form 6252, whichever applies,Line 12. An example of an amount to in-

21, orclude on line 12 is unrecaptured section or (b) the amount of unrecaptured section • The amount on Form 1040, line 41 (or1250 gain from the sale of a vacation home 1250 gain remaining to be reported. This

you previously used as a rental property but Form 1040NR, line 39, if applicable), isamount is generally the total unrecaptured converted to personal use prior to the sale. section 1250 gain for the sale reduced by all less than zero. To figure the amount to enter on line 12, gain reported in prior years (excluding sec- follow the applicable instructions below. tion 1250 ordinary income recapture). To figure any capital loss carryover to

Installment sales. To figure the amount However, if you chose not to treat all of the 2012, you will use the Capital Loss Carry- to include on line 12, follow the steps be- gain from payments received after May 6, over Worksheet in the 2012 Instructions for low for each installment sale of property 1997, and before August 24, 1999, as unre- Schedule D. If you want to figure your car-held more than 1 year for which you did not captured section 1250 gain, use only the ryover to 2012 now, see Pub. 550.make an entry in Part I of your Form 4797 amount you chose to treat as unrecaptured for the year of sale. section 1250 gain for those payments to

You will need a copy of yourreduce the total unrecaptured section 1250• Step 1. Figure the smaller of (a) the 2011 Form 1040 and Schedulegain remaining to be reported for the sale.depreciation allowed or allowable, or (b) D to figure your capital lossthe total gain for the sale. This is the Include this amount on line 12.

TIP carryover to 2012.smaller of line 22 or line 24 of your 2011

Other sales or dispositions of sectionForm 4797 (or the comparable lines of 1250 property. For each sale of propertyForm 4797 for the year of sale) for the held more than 1 year (for which you didproperty.

D-13

Schedule D Tax Worksheet Keep for Your Records Complete this worksheet only if line 18 or line 19 of Schedule D is more than zero. Otherwise, complete the Qualified Dividends and Capital Gain Tax Worksheet in the Instructions for Form 1040, line 44 (or in the Instructions for Form 1040NR, line 42) to figure your tax.

Exception: Do not use the Qualified Dividends and Capital Gain Tax Worksheet or this worksheet to figure your tax if: • Line 15 or line 16 of Schedule D is zero or less and you have no qualified dividends on Form 1040, line 9b (or Form 1040NR, line 10b); or • Form 1040, line 43 (or Form 1040NR, line 41) is zero or less.

Instead, see the instructions for Form 1040, line 44 (or Form 1040NR, line 42).

1. Enter your taxable income from Form 1040, line 43 (or Form 1040NR, line 41). (However, if you are filing Form 2555 or 2555-EZ (relating to foreign earned income), enter instead the amount from line 3 of the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040, line 44) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter your qualified dividends from Form 1040, line 9b (or Form 1040NR, line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Enter the amount from Form 4952 (used to figure investment interest expense deduction), line 4g . . . . . . . . . . . . . . . . 3.

4. Enter the amount from Form 4952, line 4e* 4. 5. Subtract line 4 from line 3. If zero or less, enter -0- . . . . . . . . . . 5. 6. Subtract line 5 from line 2. If zero or less, enter -0-** . . . . . . . . . . . . . . . . . . . . . . 6. 7. Enter the smaller of line 15 or line 16 of Schedule D . . . . . . . . 7. 8. Enter the smaller of line 3 or line 4 . . . . . . . . . . . . . . . . . . . 8. 9. Subtract line 8 from line 7. If zero or less, enter -0-** . . . . . . . . . . . . . . . . . . . . . . 9.

10. Add lines 6 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Add lines 18 and 19 of Schedule D** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. 12. Enter the smaller of line 9 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Subtract line 12 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Subtract line 13 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 15. Enter:

}• $34,500 if single or married filing separately;• $69,000 if married filing jointly or qualifying widow(er); or• $46,250 if head of household . . . . . . . . . 15. 16. Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16. 17. Enter the smaller of line 14 or line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 18. Subtract line 10 from line 1. If zero or less, enter -0- . . . . . . . . . 18. 19. Enter the larger of line 17 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 19. 20. Subtract line 17 from line 16. This amount is taxed at 0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 20.

If lines 1 and 16 are the same, skip lines 21 through 33 and go to line 34. Otherwise, go to line 21. 21. Enter the smaller of line 1 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. 22. Enter the amount from line 20 (if line 20 is blank, enter -0-) . . . . . . . . . . . . . . . . . . 22. 23. Subtract line 22 from line 21. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 23. 24. Multiply line 23 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.

If Schedule D, line 19, is zero or blank, skip lines 25 through 30 and go to line 31. Otherwise, go to line 25. 25. Enter the smaller of line 9 above or Schedule D, line 19 . . . . . . . . . . . . . . . . . . . . 25. 26. Add lines 10 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26. 27. Enter the amount from line 1 above . . . . . . . . . . . . . . . . . . . . 27. 28. Subtract line 27 from line 26. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 28. 29. Subtract line 28 from line 25. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 29. 30. Multiply line 29 by 25% (.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.

If Schedule D, line 18, is zero or blank, skip lines 31 through 33 and go to line 34. Otherwise, go to line 31. 31. Add lines 19, 20, 23, and 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31. 32. Subtract line 31 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32. 33. Multiply line 32 by 28% (.28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33. 34. Figure the tax on the amount on line 19. If the amount on line 19 is less than $100,000, use the Tax Table to figure the tax. If the

amount on line 19 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34. 35. Add lines 24, 30, 33, and 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35. 36. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax. If the

amount on line 1 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36. 37. Tax on all taxable income (including capital gains and qualified dividends). Enter the smaller of line 35 or line 36. Also include

this amount on Form 1040, line 44 (or Form 1040NR, line 42). (If you are filing Form 2555 or 2555-EZ, do not enter this amount on Form 1040, line 44. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet in the Form 1040 instructions) . . . 37.

*If applicable, enter instead the smaller amount you entered on the dotted line next to line 4e of Form 4952.

**If you are filing Form 2555 or 2555-EZ, see the footnote in the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040, line 44, before completing this line.

D-14

Internal Revenue Service

2011 Instructions for Schedule E (Form 1040) Use Schedule E (Form 1040) to report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.Supplemental

You can attach your own schedule(s) to report income or loss from any of these sources. Use the same format as on Schedule E.Income and

Enter separately on Schedule E the total income and the total loss for each part. Enclose loss figures in (parentheses).Loss

file Schedule E (or Schedule C, C-EZ, or F, if applicable). However, you can elect toGeneral Instructions treat a domestic LLC as a corporation. See Form 8832 for details on the election andOther Schedules and Forms the tax treatment of a foreign LLC.You May Have To FileWhat’s New Information returns. You may have to file• Schedule A to deduct interest, taxes, information returns for wages paid to em-and casualty losses not related to your busi-Future developments. For the latest infor- ployees, certain payments of fees and otherness.mation about Schedule E, including any de- nonemployee compensation, interest, rents,

velopments after these instructions were • Form 3520 to report certain transac- royalties, real estate transactions, annuities, released, go to www.irs.gov/form1040. tions with foreign trusts and receipt of cer- and pensions. You generally use Form

tain large gifts or bequests from certain 1099-MISC, Miscellaneous Income, to re- foreign persons. port rents and payments of fees and otherNew merchant card reporting require-

• Form 4562 to claim depreciation (in- nonemployee compensation. For details,ments. We added new lines 3a and 3b to cluding the special allowance) on assets see the instructions for line A and the 2011implement reporting of gross receipts re-

General Instructions for Certain Informa-placed in service in 2011, to claim amorti-ceived via merchant card (credit and debit tion Returns (Forms 1097, 1098, 1099,zation that began in 2011, to make an elec-cards) and third party network payments. 3921, 3922, 5498, and W-2G).tion under section 179 to expense certainHowever, for 2011, the IRS has deferred

property, or to report information on listedthe requirement to report these amounts. If you received cash of more than property. $10,000 in one or more related transactionsTherefore, enter zero on line 3a and report

• Form 4684 to report a casualty or theft in your trade or business, you may have toall gross receipts on line 3b, including any gain or loss involving property used in your file Form 8300. For details, see Pub. 1544.income reported to you on Form 1099-K, trade or business or income-producingMerchant Card and Third Party Network Husband-Wife Qualifiedproperty.Payments. See the instructions for lines 3a

Joint Venture• Form 4797 to report sales, exchanges,and 3b. and involuntary conversions (not from a If you and your spouse each materially par- casualty or theft) of trade or business prop- ticipate (see Material participation in theInformation reporting requirements. New erty. Instructions for Schedule C) as the onlylines A and B address your required filing • Form 6198 to figure your allowable members of a jointly owned and operatedof Forms 1099 in 2011. See the instructions loss from an at-risk activity. rental real estate business and you file afor line A for details and see the General

joint return for the tax year, you can make• Form 8082 to notify the IRS of anyInstructions for Certain Information Re- an election to be taxed as a qualified jointinconsistent tax treatment for an item onturns to determine whether you are required venture instead of a partnership. This elec-your return.to file any Forms 1099. tion, in most cases, will not increase the• Form 8582 to figure allowable passive total tax owed on the joint return. By mak-activity loss.Qualified joint ventures reporting rental ing the election, you will not be required to• Form 8824 to report like-kind ex-real estate income. Beginning in 2011, file Form 1065 for any year the election is

changes. in effect and will instead report the incomequalified joint ventures reporting rental real • Form 8826 to claim a credit for expen- and deductions directly on your joint re-estate income that is not subject to self-em-

ditures to improve access to your business turn. If you and your spouse filed Formployment tax must report that income on for individuals with disabilities. 1065 for the year prior to the election, theSchedule E instead of Schedule C. See

partnership terminates at the end of the taxHusband-Wife Qualified Joint Venture for • Form 8873 to figure your extraterrito- year immediately preceding the year thedetails. rial income exclusion. election takes effect.• Form 8910 to claim a credit for plac- Note. Mere joint ownership of propertying a new alternative motor vehicle in serv-Standard mileage rate. The standard mile- that is not a trade or business does not qual-ice for business use.age rate for miles driven in connection with ify for the election.your rental activities increased to 51 cents Single-member limited liability company

per mile for miles driven before July 1, (LLC). In most cases, a single-member do- Making the election. To make this elec- 2011 and increased to 55.5 cents per mile mestic LLC is not treated as a separate en- tion for your rental real estate business, for miles driven after June 30, 2011. See tity for federal income tax purposes. If you check the “QJV” box on line 2 for each the instructions for line 6. are the sole member of a domestic LLC, property that is part of the qualified joint

E-1 Cat. No. 24332TNov 02, 2011

venture. You must divide all items of in- For more information on qualified joint In most cases, you are not at risk for come, gain, loss, deduction, and credit at- ventures, go to IRS.gov. Enter “qualified amounts such as the following. tributable to the business between you and joint venture” in the search box and select • Nonrecourse loans used to finance the your spouse in accordance with your re- “Election for Husband and Wife Unincorp- activity, to acquire property used in the ac- spective interests in the venture. Although orated Businesses.” tivity, or to acquire your interest in the ac- you and your spouse will not each file your tivity that are not secured by your own own Schedule E as part of the qualified Reportable Transaction property (other than property used in the joint venture, each of you must report your activity). However, there is an exceptionDisclosure Statement interest as separate properties on line 1 of for certain nonrecourse financing borrowedUse Form 8886 to disclose information forSchedule E. On lines 3 through 22 for each by you in connection with the activity ofeach reportable transaction in which youseparate property interest, you must enter holding real property (other than mineralparticipated. Form 8886 must be filed foryour share of the applicable income, deduc- property). See Qualified nonrecourse fi-each tax year that your federal income taxtion, or loss. nancing below.liability is affected by your participation in • Cash, property, or borrowed amountsIf you have more than three rental real the transaction. You may have to pay a

used in the activity (or contributed to theestate or royalty properties, complete and penalty if you are required to file Form activity, or used to acquire your interest inattach as many Schedules E as you need to 8886 but do not do so. You may also have the activity) that are protected against losslist them. But fill in lines 23a through 26 on to pay interest and penalties on any reporta- by a guarantee, stop-loss agreement, oronly one Schedule E. The figures on lines ble transaction understatements. The fol- other similar arrangement (excluding casu-23a through 26 on that Schedule E should lowing are reportable transactions. alty insurance and insurance against tortbe the combined totals for all properties • Any listed transaction that is the same liability).reported on your Schedules E. as or substantially similar to tax avoidance • Amounts borrowed for use in the ac-transactions identified by the IRS.Once made, the election can be revoked tivity from a person who has an interest inonly with the permission of the IRS. How- • Any transaction offered to you or a the activity (other than as a creditor) or whoever, the election technically remains in ef- related party under conditions of confiden- is related under section 465(b)(3)(C) to afect only for as long as the spouses filing as tiality for which you paid an advisor a fee person (other than you) having such an in-a qualified joint venture continue to meet of at least $50,000. terest.the requirements for filing the election. If • Certain transactions for which you or

the spouses fail to meet the qualified joint a related party have contractual protection Qualified nonrecourse financing. Quali- venture requirements for a year, a new elec- against disallowance of the tax benefits. fied nonrecourse financing is treated as an tion will be necessary for any future year in amount at risk if it is secured by real prop-• Certain transactions resulting in a losswhich the spouses meet the requirements to erty used in an activity of holding real prop-of at least $2 million in any single tax yearbe treated as a qualified joint venture. erty subject to the at-risk rules. Qualifiedor $4 million in any combination of tax

nonrecourse financing is financing foryears. (At least $50,000 for a single taxRental real estate income generally is which no one is personally liable for repay-year if the loss arose from a foreign cur-not included in net earnings from self-em- ment and is:rency transaction defined in sectionployment subject to self-employment tax

988(c)(1), whether or not the loss flows • Borrowed by you in connection withand generally is subject to passive loss lim- through from an S corporation or partner- the activity of holding real property (otheritation rules. Electing qualified joint ven- ship.) than mineral property),ture status does not alter the application of

the self-employment tax or the passive loss • Certain transactions of interest en- • Not convertible from a debt obligation limitation rules. tered into after November 1, 2006, that are to an ownership interest, and

the same or substantially similar to transac- • Loaned or guaranteed by any federal,Exception—Community tions that the IRS has identified by notice, state, or local government, or borrowed by regulation, or other form of published gui-Income you from a qualified person. dance as transactions of interest.

If you and your spouse wholly own an un- Qualified person. A qualified person is aincorporated business as community prop- See the Instructions for Form 8886 for person who actively and regularly engageserty under the community property laws of more details. in the business of lending money, such as aa state, foreign country, or U.S. possession, bank or savings and loan association. Athe income and deductions are reported as At-Risk Rules qualified person cannot be:follows. In most cases, you must complete Form • Related to you (unless the nonre-• If only one spouse participates in the 6198 to figure your allowable loss if you course financing obtained is commerciallybusiness, all of the income from that busi- have: reasonable and on substantially the sameness is the self-employment earnings of the • A loss from an activity carried on as a terms as loans involving unrelated per-spouse who carried on the business. trade or business or for the production of sons),• If both spouses participate, the income income, and • The seller of the property (or a personand deductions are allocated to the spouses • Amounts in the activity for which you related to the seller), orbased on their distributive shares. are not at risk. • A person who receives a fee due to• If either or both you and your spouse your investment in real property (or a per-The at-risk rules in most cases limit theare partners in a partnership, see Pub. 541. son related to that person).amount of loss (including loss on the dispo-• If you and your spouse elected to treat

sition of assets) you can claim to thethe business as a qualifying joint venture, For more details about the at-risk rules, amount you could actually lose in the activ-see Husband-Wife Qualified Joint Venture, see the Instructions for Form 6198 and Pub. ity. However, the at-risk rules do not applyearlier. 925. to losses from an activity of holding real

The only states with community prop- property placed in service before 1987. Passive Activity Loss Ruleserty laws are Arizona, California, Idaho, They also do not apply to losses from your Louisiana, Nevada, New Mexico, Texas, interest acquired before 1987 in a The passive activity loss rules may limit the Washington, and Wisconsin. A change in pass-through entity engaged in such activ- amount of losses you can deduct. These your reporting position will be treated as a ity. The activity of holding mineral prop- rules apply to losses in Parts I, II, and III, conversion of the entity. erty does not qualify for this exception. and line 40 of Schedule E.

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Losses from passive activities may be trade or business unless you owned more d. You have no current or prior year subject first to the at-risk rules. Losses de- than 5% of the stock (or more than 5% of unallowed credits from passive activities; ductible under the at-risk rules are then the capital or profits interest) in the em- and subject to the passive activity loss rules. ployer. e. Your modified adjusted gross income

(defined later) is $100,000 or less ($50,000You can deduct losses from passive ac- For purposes of this rule, each interest in or less if married filing separately).tivities in most cases only to the extent of rental real estate is a separate activity un-

income from passive activities. An excep- less you elect to treat all your interests in tion applies to certain rental real estate ac- Active participation. You can meet the ac-rental real estate as one activity. To make tivities (explained later). tive participation requirement without reg-this election, attach a statement to your

ular , continuous, and substantialoriginal tax return that declares you are aPassive Activity involvement in real estate activities. Butqualifying taxpayer for the year and you are

A passive activity is any business activity you must have participated in making man-making the election under section in which you did not materially participate agement decisions or arranging for others469(c)(7)(A). The election applies for the and any rental activity, except as explained to provide services (such as repairs) in ayear made and all later years in which you later. If you are a limited partner, you in significant and bona fide sense. Such man-are a real estate professional. You can re- most cases are not treated as having materi- agement decisions include:voke the election only if your facts and ally participated in the partnership’s activi- circumstances materially change. • Approving new tenants, ties for the year. • Deciding on rental terms,If you did not make this elec-The rental of real or personal property is • Approving capital or repair expendi-tion on your timely filed return,a rental activity under the passive activity tures, andyou may be eligible to make aloss rules in most cases, but exceptions ap-

TIP late election to treat all your in- • Other similar decisions.ply. If your rental of property is not treated

terest in rental real estate as one activity.as a rental activity, you must determine You are not considered to actively par-See Rev. Proc. 2011-34, 2011-24 I.R.B.whether it is a trade or business activity, ticipate if, at any time during the tax year,874, available at www.irs.gov/irb/and if so, whether you materially partici- your interest (including your spouse’s in-2011-24_IRB/ar07.html.pated in the activity for the tax year. terest) in the activity was less than 10% by value of all interests in the activity. If youIf you were a real estate professional forSee the Instructions for Form 8582 to are a limited partner, you are also not2011, complete Schedule E, line 43.determine whether you materially partici- treated as actively participating in apated in the activity and for the definition

Other activities. The rental of your home partnership’s rental real estate activities.of “rental activity.” that you also used for personal purposes is

See Pub. 925 for special rules that apply Modified adjusted gross income. This isnot a passive activity. See the instructions to rentals of: your adjusted gross income from Formfor line 2.

1040, line 38, or Form 1040NR, line 37,• Substantially nondepreciable prop- A working interest in an oil or gas well without taking into account:erty,

you held directly or through an entity that • Any allowable passive activity loss,• Property incidental to development did not limit your liability is not a passive activities, and • Rental real estate losses allowed foractivity even if you did not materially par-

real estate professionals (see Activities of• Property related to activities in which ticipate. real estate professionals, earlier),you materially participate.

Royalty income not derived in the ordi- • Taxable social security or tier 1 rail-Activities That Are Not Passive nary course of a trade or business reported road retirement benefits,Activities on Schedule E in most cases is not consid-

• Deductible contributions to a tradi-ered income from a passive activity.Activities of real estate professionals. If tional IRA or certain other qualified retire- you were a real estate professional for For more details on passive activities, ment plans under section 219, 2011, any rental real estate activity in see the Instructions for Form 8582 and Pub. • The student loan interest deduction,which you materially participated is not a 925. • The tuition and fees deduction,passive activity. You were a real estate pro-

Exception for Certain Rental Realfessional for the year only if you met both • The domestic production activities de- Estate Activitiesof the following conditions. duction,

• More than half of the personal serv- If you meet all of the following conditions, • The deduction for a portion of ices you performed in trades or businesses your rental real estate losses are not limited self-employment tax, during the year were performed in real by the passive activity loss rules. If you do • The exclusion from income of interest property trades or businesses in which you not meet all of these conditions, see the from series EE and I U.S. savings bonds materially participated. Instructions for Form 8582 to find out if used to pay higher education expenses, and

you must complete and attach Form 8582• You performed more than 750 hours • Any excluded amounts under anto figure any losses allowed.of services during the year in real property employer’s adoption assistance program. trades or businesses in which you materi- 1. Rental real estate activities are your ally participated. only passive activities. Recordkeeping

If you are married filing jointly, either 2. You do not have any prior year unal- You must keep records to support items you or your spouse must meet both of the lowed losses from any passive activities. reported on Schedule E in case the IRS has above conditions without taking into ac- questions about them. If the IRS examines3. All of the following apply if you have count services performed by the other your tax return, you may be asked to ex-an overall net loss from these activities: spouse. plain the items reported. Good records willa. You actively participated (defined be-A real property trade or business is any help you explain any item and arrive at thelow) in all of the rental real estate activities;real property development, redevelopment, correct tax with a minimum of effort. If you

b. If married filing separately, you livedconstruction, reconstruction, acquisition, do not have records, you may have to spend apart from your spouse all year;conversion, rental, operation, management, time getting statements and receipts from

leasing, or brokerage trade or business. c. Your overall net loss from these ac- various sources. If you cannot produce the Services you performed as an employee are tivities is $25,000 or less ($12,500 or less if correct documents, you may have to pay not treated as performed in a real property married filing separately); additional tax and be subject to penalties.

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list them. But fill in lines 23a through 26 on For each property listed on line 1, report only one Schedule E. The figures on lines the number of days in the year each prop-Specific Instructions 23a through 26 on that Schedule E should erty was rented at fair rental value and the

Filers of Form 1041. If you are a fiduciary be the combined totals for all properties number of days of personal use. filing Schedule E with Form 1041, enter the reported on your Schedules E. If you are A day of personal use is any day, or partestate’s or trust’s employer identification also using page 2 of Schedule E, use the of a day, that the unit was used by:number (EIN) in the space for “Your social same Schedule E on which you entered the • You for personal purposes,security number.” combined totals for Part I.

• Any other person for personal pur- Personal property. Do not use Schedule E poses, if that person owns part of the unit to report income and expenses from the (unless rented to that person under aLine A rental of personal property, such as equip- “shared equity” financing agreement), ment or vehicles. Instead, use Schedule CIf you made any payments in 2011 that • Anyone in your family (or in the fam- or C-EZ if you are in the business of rentingwould require you to file any Forms 1099, ily of someone else who owns part of the personal property. You are in the businesscheck the “Yes” box. Otherwise, check the unit), unless the unit is rented at a fair rental of renting personal property if the primary“No” box. See page 15 of the General In- price to that person as his or her main purpose for renting the property is incomestructions for Certain Information Returns home, or profit and you are involved in the rentalif you are unsure whether you were re- • Anyone who pays less than a fairactivity with continuity and regularity.quired to file any Forms 1099. Also see the rental price for the unit, orseparate instructions for each Form 1099. If your rental of personal property is not • Anyone under an agreement that lets a business, see the instructions for Form you use some other unit.Generally, you must file Form 1040, lines 21 and 36, to find out how to1099-MISC if you paid at least Do not count as personal use:report the income and expenses.$600 in rents, services, prizes, • Any day you spent working substan-

TIP medical and health care pay- Extraterritorial income exclusion. Except tially full time repairing and maintainingments, and other income payments. The as otherwise provided in the Internal Reve- the unit, even if family members used it forGuide to Information Returns on page 15 of nue Code, gross income includes all in- recreational purposes on that day, orthe General Instructions for Certain Infor- come from whatever source derived. Gross • Any days you used the unit as yourmation Returns has more information, in- income, however, does not include extra- main home before or after renting it or of-cluding the due dates for the various territorial income that is qualifying foreign fering it for rent, if you rented or tried toinformation returns. trade income under certain circumstances. rent it for at least 12 consecutive months (orUse Form 8873 to figure the extraterritorial for a period of less than 12 consecutiveincome exclusion. Report it on Schedule E months at the end of which you sold oras explained in the Instructions for Form exchanged it).Part I 8873.

Whether or not you can deduct expensesBefore you begin, see the in- Chapter 11 bankruptcy cases. If you were for the unit depends on whether or not youstructions for lines 3a and 3b to a debtor in a chapter 11 bankruptcy case, used the property as a residence in 2011.determine if you should report see Chapter 11 Bankruptcy Cases under In- You used the property as a residence if youryour rental real estate and roy- come in the Instructions for Form 1040. personal use of the property was more thanalty income on Schedule C, Schedule

the greater of:C-EZ, or Form 4835, instead of Schedule Line 1E. • 14 days, or For rental real estate property only, show • 10% of the total days it was rented to the street address, city or town, state, and others at a fair rental price.Income or Loss From ZIP code. If the property is located in a If you did not use the property as a resi-foreign country, enter the city, province orRental Real Estate and dence, you can deduct all your expenses forstate, country, and postal code. the rental part, subject to the At-Risk RulesRoyalties and the Passive Activity Loss Rules ex-For the type of property, enter one of the

Use Part I to report the following. plained above.codes listed under “Type of Property” in Part I of the form.• Income and expenses from rental real If you did use the property as a resi-

estate (including personal property leased dence and rented the unit out for fewer thanSelf-rental. Enter code type “7” forwith real estate). 15 days in 2011, do not report the rentalself-rental if you rent property to a trade or• Royalty income and expenses. income and do not deduct any rental ex-business in which you materially partici- penses. If you itemize deductions on• For an estate or trust only, farm rental pated. See Rental of Property to a Nonpas- Schedule A, you can deduct allowable in-income and expenses based on crops or sive Activity in Pub. 925 for details about terest, taxes, and casualty losses.livestock produced by the tenant. Do not the tax treatment of income from this type

use Form 4835 or Schedule F (Form 1040) If you did use the property as a resi-of rental property. for this purpose. dence and rented the unit out for at least 15

Other. Enter code type “8” if the property days in 2011, you may not be able to deductIf you own a part interest in a rental real is not one of the other types listed on the all your rental expenses. You can deduct allestate property, report only your part of the form. Attach a statement to your return the following expenses for the rental partincome and expenses on Schedule E. describing the property. on Schedule E. Complete lines 1 and 2 for each rental

• Mortgage interest.real estate property. For royalty properties, Line 2 line 2 and the address portion on line 1 • Real estate taxes.If you rented out a dwelling unit that youshould be left blank and you should enter • Casualty losses.also used for personal purposes during thecode “6” for royalty property. year, you may not be able to deduct all the • Other rental expenses not related to

If you have more than three rental real expenses for the rental part. “Dwelling your use of the unit as a home, such as estate or royalty properties, complete and unit” (unit) means a house, apartment, con- advertising expenses and rental agents’ attach as many Schedules E as you need to dominium, or similar property. fees.

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If any income is left after deducting use Schedule E to report income and ex- and depletion (line 18), and total expenses these expenses, you can deduct other ex- penses from rentals of real estate you held (line 20) on lines 23e through 23g, respec- penses, including depreciation, up to the for sale to customers in the ordinary course tively, even if you have only one property. amount of remaining income. You can of your business as a real estate dealer.

Renting out part of your home. If you rentcarry over to 2012 the amounts you cannot Instead use Schedule C or C-EZ for those out only part of your home or other prop-deduct. rentals. erty, deduct the part of your expenses that

For more details on rental income, use applies to the rented part.Regardless of whether you used TeleTax topic 414 (see What is TeleTax? inthe unit as a residence, ex- Credit or deduction for access expendi-the Instructions for Form 1040), or see Pub.penses related to days of per- tures. You may be able to claim a tax527.sonal use do not qualify as credit for eligible expenditures paid or in-

rental expenses. You must allocate your ex- Rental income from farm production or curred in 2011 to provide access to your penses based on the number of days of per- crop shares. Report farm rental income business for individuals with disabilities. sonal use to total use of the property. For and expenses on Form 4835 if: See Form 8826 for details. example, you used your property for per- • You are an individual, You can also elect to deduct up tosonal use for 7 days and rented it for 63 • You received rental income based on $15,000 of qualified costs paid or incurreddays. In most cases, 10% (7÷70) of your

crops or livestock produced by the tenant, in 2011 to remove architectural or transpor-expenses are not rental expenses and can- and tation barriers to individuals with disabili-not be deducted on Schedule E.

ties and the elderly.• You did not materially participate in See Pub. 527 for details. the management or operation of the farm. You cannot take both the credit and the

QJV. Check the box for “QJV” if you deduction for the same expenditures.Royalties. Report on line 3b royalties from owned the property as a member of a quali- oil, gas, or mineral properties (not includ- fied joint venture reporting income not sub- ing operating interests); copyrights; and Line 6ject to self-employment tax. See patents. Use a separate column (A, B, or C)

You can deduct ordinary and necessaryHusband-Wife Qualified Joint Venture, for each royalty property. auto and travel expenses related to yourearlier.

If you received $10 or more in royalties rental activities, including 50% of meal ex- during 2011, the payer should send you a penses incurred while traveling away fromLine 3a and 3b Form 1099-MISC or similar statement by home. In most cases you can either deduct

If you received merchant card and third January 31, 2012, showing the amount you your actual expenses or take the standard party network payments in 2011, you received. Report this amount on line 3b. mileage rate. You must use actual expenses should receive a Form 1099-K for those if you used more than four vehicles simul-If you are in business as a self-employedpayments. Box 1 of Form 1099-K shows taneously in your rental activities (as inwriter, inventor, artist, etc., report your roy-the amount of the payments. Merchant fleet operations). You cannot use actual ex-alty income and expenses on Schedule C.cards include, but are not limited to, Visa penses for a leased vehicle if you previ-

You may be able to treat amounts re-and MasterCard. Third party networks in- ously used the standard mileage rate for ceived as “royalties” for the transfer of aclude, but are not limited to, Paypal and that vehicle. patent or amounts received on the disposalGoogle Checkout.

You can use the standard mileage rateof coal and iron ore as the sale of a capitalIn some cases, you may not receive for 2011 only if you:asset. For details, see Pub. 544.Forms 1099-K for merchant card and third • Owned the vehicle and used the stan-Enter on line 3b the gross amount of rentparty network payments that you need to dard mileage rate for the first year youand royalty income, even if state or localinclude as income. placed the vehicle in service, ortaxes were withheld from oil or gas pay-

For 2011, you are not required to report • Leased the vehicle and are using thements you received. Include taxes withheld income received via merchant card or third standard mileage rate for the entire leaseby the producer on line 16. party network payors, so enter zero on line period (except the period, if any, before

Special rule for partners. If you are a part-3a and report all income, regardless of how 1998). ner that received a Schedule K-1 from theit was received, on line 3b.

If you take the standard mileage rate,partnership showing royalty income that Rents. If you received rental income from multiply the number of miles driven in con-was reported on Form 1099-K, report this real estate (including personal property nection with your rental activities by 51income on line 3b. See the partner’s in- leased with real estate), report the income cents for miles driven before July 1, andstructions for your K-1 for details. on line 3b. Use a separate column (A, B, or 55.5 cents per mile for miles driven after C) for each rental property. Include income Line 4 June 30. Include this amount and your received for renting a room or other space. parking fees and tolls on line 6.Since line 3a is zero, enter on line 4 the

If you received services or property in- amount from line 3b. You cannot deduct rental orstead of money as rent, report the fair mar- lease payments, depreciation,ket value of what you received as rental General Instructions for or your actual auto expenses ifincome on line 3b. you use the standard mileageLines 5 Through 21 If you provided significant services to rate.

Enter your rental and royalty expenses forthe renter, such as maid service, report the If you deduct actual auto expenses:each property in the appropriate column.rental activity on Schedule C or C-EZ, not You can deduct all ordinary and necessary • Include on line 6 the rental activityon Schedule E. Significant services do not expenses, such as taxes, interest, repairs, portion of the cost of gasoline, oil, repairs,include the furnishing of heat and light, insurance, management fees, agents’ com- insurance, tires, license plates, etc., andcleaning of public areas, trash collection, or missions, and depreciation. • Show auto rental or lease payments onsimilar services.

line 19 and depreciation on line 18.Do not deduct the value of your ownIf you were a real estate dealer, include labor or amounts paid for capital invest-only the rent received from real estate (in- If you claim any auto expenses (actual ments or capital improvements.cluding personal property leased with this or the standard mileage rate), you must

real estate) you held for the primary pur- Enter your total expenses for mortgage complete Part V of Form 4562 and attach pose of renting to produce income. Do not interest (line 12), depreciation expenses Form 4562 to your tax return.

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See Pub. 527 and Pub. 463 for details. that increase the value of the property or Line 19extend its life, such as replacing a roof or Enter on line 19 any ordinary and necessaryrenovating a kitchen, must be capitalizedLine 10 expenses not listed on lines 5 through 18.and depreciated (that is, they cannot be de-

Include on line 10 fees for tax advice and ducted in full in the year they are paid or You may be able to deduct, on line 19,the preparation of tax forms related to your incurred). See the instructions for line 18. part or all of the cost of modifying existingrental real estate or royalty properties. commercial buildings to make them energy

Do not deduct legal fees paid or in- Line 17 efficient. For details, see section 179D, No- curred to defend or protect title to property, tice 2006-52, and Notice 2008-40. You canYou can deduct the cost of ordinary andto recover property, or to develop or im- find Notice 2006-52 on page 1175 of Inter-necessary telephone calls related to yourprove property. Instead, you must capital- nal Revenue Bulletin 2006-26 atrental activities or royalty income (for ex-ize these fees and add them to the www.irs.gov/irb/2006-26_IRB/ar11.html.ample, calls to the renter). However, theproperty’s basis. You can find Notice 2008-40 on page 725base rate (including taxes and other

of Internal Revenue Bulletin 2008-14 atcharges) for local telephone service for theLines 12 and 13 www.irs.gov/irb/2008-14_IRB/ar12.html.first telephone line into your residence is a personal expense and is not deductible.In most cases, to determine the interest ex-

Line 21pense allocable to your rental activities, you must have records to show how the Line 18 If you have amounts for which you are not proceeds of each debt were used. Specific at risk, use Form 6198 to determine theDepreciation is the annual deduction youtracing rules apply for allocating debt pro- amount of your deductible loss. Enter thatmust take to recover the cost or other basisceeds and repayment. See Pub. 535 for de- amount in the appropriate column ofof business or investment property having atails. Schedule E, line 21. In the space to the leftuseful life substantially beyond the tax

of line 21, enter “Form 6198.” Attach FormIf you have a mortgage on your rental year. Land is not depreciable. 6198 to your return. For details on theproperty, enter on line 12 the amount of

Depreciation starts when you first use at-risk rules, see At-Risk Rules, earlier.interest you paid for 2011 to banks or other the property in your business or for thefinancial institutions. production of income. It ends when you Line 22Do not deduct prepaid interest when you deduct all your depreciable cost or other

paid it. You can deduct it only in the year to Do not complete line 22 if the amount onbasis or no longer use the property in your which it is properly allocable. Points, in- line 21 is from royalty properties.business or for the production of income. cluding loan origination fees, charged only

If you have a rental real estate loss fromSee the Instructions for Form 4562 tofor the use of money must be deducted over a passive activity (defined earlier), thefigure the amount of depreciation to enterthe life of the loan. amount of loss you can deduct may be lim-on line 18.

If you paid $600 or more in interest on a ited by the passive activity loss rules. You You must complete and attach Formmortgage during 2011, the recipient should may need to complete Form 8582 to figure

4562 only if you are claiming:send you a Form 1098 or similar statement the amount of loss, if any, to enter on line • Depreciation on property first placedby January 31, 2012, showing the total in- 22. See the Instructions for Form 8582 to

in service during 2011,terest received from you. determine if your loss is limited. • Depreciation on listed property (de-If you paid more mortgage interest than If your rental real estate loss is not from

fined in the Instructions for Form 4562),is shown on your Form 1098 or similar a passive activity or you meet the exception including a vehicle, regardless of the date itstatement, see Pub. 535 to find out if you for certain rental real estate activities (ex- was placed in service, orcan deduct part or all of the additional inter- plained earlier), you do not have to com-

est. If you can, enter the entire deductible • A section 179 expense deduction or plete Form 8582. Enter the loss from line amount on line 12. Attach a statement to amortization of costs that began in 2011. 21 on line 22. your return explaining the difference. On See Pub. 527 for more information on If you have an unallowed rental real es-the dotted line next to line 12, enter “See depreciation of residential rental property. tate loss from a prior year that after com-attached.” See Pub. 946 for a more comprehensive pleting Form 8582 you can deduct this

guide to depreciation. year, include that loss on line 22.Note. If the recipient was not a financial institution or you did not receive a Form If you have an economic interest in min- 1098 from the recipient, report your de- eral property, you may be able to take a ductible mortgage interest on line 13. deduction for depletion. Mineral property

includes oil and gas wells, mines, and other Parts II and IIIIf you and at least one other person natural deposits (including geothermal de-(other than your spouse if you file a joint If you need more space in Part II or III toposits). See Pub. 535 for details.return) were liable for and paid interest on list your income or losses, attach a continu-

the mortgage, and the other person received ation sheet using the same format as shownSeparating cost of land and buildings. If Form 1098, report your share of the deduct- in Part II or III. However, be sure to com-you buy buildings and your cost includes ible interest on line 13. Attach a statement plete the “Totals” columns for lines 29athe cost of the land on which they stand, to your return showing the name and ad- and 29b, or lines 34a and 34b, as appropri-you must divide the cost between the land dress of the person who received Form ate. If you also completed Part I on moreand the buildings to figure the basis for 1098. On the dotted line next to line 13, than one Schedule E, use the same Sched-depreciation of the buildings. The part of enter “See attached.” ule E on which you entered the combinedthe cost that you allocate to each asset is the

totals in Part I.ratio of the fair market value of that asset to the fair market value of the whole propertyLine 14 Tax preference items. If you are a partner, at the time you buy it.You can deduct the cost of repairs made to a shareholder in an S corporation, or a ben-

keep your property in good working condi- If you are not certain of the fair market eficiary of an estate or trust, you must take tion. Repairs in most cases do not add sig- values of the land and the buildings, you into account your share of preferences and nificant value to the property or extend its can divide the cost between them based on adjustments from these entities for the al- life. Examples of repairs are fixing a bro- their assessed values for real estate tax pur- ternative minimum tax on Form 6251 or ken lock or painting a room. Improvements poses. Schedule I (Form 1041).

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expenses, deductions, and credits for each If you are a U.S. person, you may have activity engaged in by the partnership and S received Forms 1099-B, 1099-DIV, andPart II corporation. If you are subject to the at-risk 1099-INT reporting your share of certain rules for any activity, check the box on the partnership income, because payors of in-Income or Loss From appropriate line in Part II, column (e) of come to the foreign partnership in mostPartnerships and S Schedule E, and use Form 6198 to figure cases are required to allocate and reportCorporations the amount of any deductible loss. If the payments of that income directly to each of activity is nonpassive, enter any deductibleIf you are a member of a partnership or the partners of the foreign partnership. If loss from Form 6198 on the appropriatejoint venture or a shareholder in an S corpo- you received both Schedule K-1 and Form line in Part II, column (h) of Schedule E.ration, use Part II to report your share of the 1099 for the same type and source of part-

partnership or S corporation income (even nership income, report only the income• If you have a passive activity loss, in if not received) or loss. shown on Schedule K-1 in accordance withmost cases you need to complete Form

8582 to figure the amount of the allowable its instructions. If you elected to be taxed as a loss to enter in Part II, column (f), for that qualified joint venture instead If you are not a U.S. person, you mayactivity. But if you are a general partner or of a partnership, follow the re- have received Forms 1042-S reporting youran S corporation shareholder reporting p o r t i n g r u l e s u n d e r share of certain partnership income, be-your share of a partnership or an S corpora-

Husband-Wife Qualified Joint Venture, tion loss from a rental real estate activity cause payors of income to the foreign part- earlier. and you meet all of the conditions listed nership in most cases are required to

earlier under Exception for Certain Rental allocate and report payments of that incomeYou should receive a Schedule K-1 Real Estate Activities, you do not have to directly to each of the partners of the for-from the partnership or S corporation. You complete Form 8582. Instead, enter your eign partnership. If you received bothshould also receive a copy of the Partner’s allowable loss in Part II, column (f).or Shareholder’s Instructions for Schedule Schedule K-1 and Form 1042-S for the

K-1. Your copy of Schedule K-1 and its same type and source of partnership in-If you have passive activity income,instructions will tell you where on your come, report the income on your return ascomplete Part II, column (g), for that activ-return to report your share of the items. If follows.ity.you did not receive these instructions with • For all income effectively connectedyour Schedule K-1, see the instructions for If you have nonpassive income or with the conduct of a trade or business inForm 1040 or Form 1040NR for how to get losses, complete Part II, columns (h) the United States, report only the incometax forms, instructions, and publications. through (j), as appropriate. shown on Schedule K-1 in accordance withDo not attach Schedules K-1 to your return. its instructions.Domestic PartnershipsKeep them for your records.

• For all income not effectively con-See the Schedule K-1 instructions beforeIf you are treating items on your tax nected with the conduct of a trade or busi-entering on your return other partnershipreturn differently from the way the partner- ness in the United States, report on page 4items from a passive activity or income orship (other than an electing large partner- of Form 1040NR only the income shownloss from any publicly traded partnership.ship) or S corporation reported them on its on Form 1042-S (if you are required to file return, you may have to file Form 8082. If Form 1040NR).You can deduct unreimbursed ordinary you are a partner in an electing large part- and necessary expenses you paid on behalf nership, you must report the items shown of the partnership if you were required to Requirement to file Form 8865. If you are on Schedule K-1 (Form 1065-B) on your pay these expenses under the partnership a U.S. person, you may have to file Form tax return the same way the partnership agreement. See the instructions for line 27 8865 if any of the following applies. reported the items on Schedule K-1. for how to report these expenses. 1. You controlled a foreign partnership Special rules that limit losses. Please note (that is, you owned more than a 50% directReport allowable interest expense paid the following. or indirect interest in the partnership).or incurred from debt-financed acquisitions

• If you have an interest in a partnership in Part II or on Schedule A depending on 2. You owned at least a 10% direct or or S corporation that is involved in a farm- the type of expenditure to which the inter- indirect interest in a foreign partnership ing business, your losses may be limited if est is allocated. See Pub. 535 for details. while U.S. persons controlled that partner- the partnership accepted certain subsidies. ship.If you claimed a credit for federal tax onYou will be notified on the K-1 if the part-

3. You had an acquisition, disposition,gasoline or other fuels on your 2010 Formnership or S corporation received one of or change in proportional interest of a for-1040 or Form 1040NR based on informa-these subsidies. Use Worksheet 1 on the eign partnership that:tion received from the partnership, enter aslast page of these instructions to determine

income in column (g) or column (j), which-if you have an excess farm loss. See the a. Increased your direct interest to at ever applies, the amount of the creditinstructions for Schedule F for more details least 10% or reduced your direct interest of claimed for 2010.on how to complete the worksheet. at least 10% to less than 10%, or

b. Changed your direct interest by atPart or all of your share of partnershipIf you have other farming busi- income or loss from the operation of the least a 10% interest.nesses requiring you to file business may be considered net earnings 4. You contributed property to a foreignSchedule F or any Schedule C from self-employment that must be re- partnership in exchange for a partnershipactivity of processing a farm ported on Schedule SE. Enter the amount interest if:commodity, you should use one of the from Schedule K-1 (Form 1065), box 14,worksheets in the instructions for Schedule a. Immediately after the contribution,code A (or from Schedule K-1 (FormF instead of Worksheet 1 on the last page of you owned, directly or indirectly, at least a1065-B), box 9 (code J1)), on Schedule SE,these instructions. 10% interest in the partnership, orafter you reduce this amount by any allow-• If you have a current year loss, or a able expenses attributable to that income. b. The value of the property you con-

prior year unallowed loss, from a partner- tributed, when added to the value of any ship or an S corporation, see At-Risk Rules Foreign Partnerships other property you or any related person and Passive Activity Loss Rules, earlier. contributed to the partnership during theFollow the instructions below in addition to

12-month period ending on the date ofPartners and S corporation shareholders the instructions above for Domestic Part- transfer, exceeds $100,000.should get a separate statement of income, nerships.

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Also, you may have to file Form 8865 to • Enter “PYA” in column (a) of the report certain dispositions by a foreign same line. Part III partnership of property you previously con-

Prior Year Unallowed Lossestributed to that partnership if you were a Income or Loss From From a Passive Activity Notpartner at the time of the disposition. Estates and Trusts Reported on Form 8582

If you are a beneficiary of an estate or trust,For more details, including penalties for • Enter on a separate line in column (f) use Part III to report your part of the in-failing to file Form 8865, see Form 8865 of line 28 your total prior year unallowed come (even if not received) or loss. Youand its separate instructions. losses not reported on Form 8582. Such should receive a Schedule K-1 (Form 1041) losses include prior year unallowed losses from the fiduciary. Your copy of ScheduleS Corporations now deductible because you did not have K-1 and its instructions will tell you where

If you are a shareholder in an S corporation, on your return to report the items froman overall loss from all passive activities or your share of the corporation’s aggregate Schedule K-1. Do not attach Schedule K-1you disposed of your entire interest in a losses and deductions (combined income, to your return. Keep it for your records.passive activity in a fully taxable transac- losses, and deductions) is in most cases

tion. Do not combine these losses with, or If you are treating items on your taxlimited to the adjusted basis of your corpo- net them against, any current year amounts return differently from the way the estate orrate stock and any debt the corporation from the partnership or S corporation. trust reported them on its return, you mayowes you. Any loss or deduction not al-

have to file Form 8082.• Enter “PYA” in column (a) of thelowed this year because of the basis limita- same line.tion can be carried forward and deducted in If you have estimated taxes credited to

a later year subject to the basis limitation you from a trust (Form 1041, ScheduleUnreimbursed Partnershipfor that year. K-1, box 13, code A), enter “ES paymentExpenses claimed” and the amount on the dotted line If you are claiming a deduction for your • You can deduct unreimbursed ordi- next to line 37. Do not include this amount

share of an aggregate loss, attach to your nary and necessary partnership expenses in the total on line 37. Instead, enter the return a computation of the adjusted basis you paid on behalf of the partnership on amount on Form 1040, line 63, or Form of your corporate stock and of any debt the Schedule E if you were required to pay 1040NR, line 62. corporation owes you. See the Schedule these expenses under the partnership agree-

A U.S. person who transferred propertyK-1 instructions for details. ment (except amounts deductible only as to a foreign trust may have to report the itemized deductions, which you must enterAfter applying the basis limitation, the income received by the trust as a result of on Schedule A).deductible amount of your aggregate losses the transferred property if, during 2011, the

• Enter unreimbursed partnership ex-and deductions may be further reduced by trust had a U.S. beneficiary. See section penses from nonpassive activities on a sep- 679. An individual who received a distribu-the at-risk rules and the passive activity

tion from, or who was the grantor of orloss rules. See At-Risk Rules and Passive arate line in column (h) of line 28. Do not transferor to, a foreign trust must also com-Activity Loss Rules, earlier. combine these expenses with, or net them plete Part III of Schedule B (Form 1040Aagainst, any other amounts from the part-

Distributions of prior year accumulated or 1040) and may have to file Form 3520.nership. In addition, the owner of a foreign trustearnings and profits of S corporations are • If the expenses are from a passive ac- must ensure that the trust files an annualdividends and are reported on Form 1040,

tivity and you are not required to file Form information return on Form 3520-A.line 9a. 8582, enter the expenses related to a pas- sive activity on a separate line in column (f)Interest expense relating to the acquisi- of line 28. Do not combine these expensestion of shares in an S corporation may be with, or net them against, any otherfully deductible on Schedule E. For details, Part IV amounts from the partnership.see Pub. 535.

Income or Loss From Real• Enter “UPE” in column (a) of the Your share of the net income of an S same line. Estate Mortgage Investment

corporation is not subject to self-employ- Conduits (REMICs)ment tax. Line 28 If you are the holder of a residual interest in

For nonpassive income or loss (and passive a REMIC, use Part IV to report your totalLine 27 income or losses for which you are not share of the REMIC’s taxable income orIf you answered “Yes” on line 27, follow filing Form 8582), enter in the applicable loss for each quarter included in your tax

the instructions below. If you fail to follow column of line 28 your current year ordi- year. You should receive Schedule Q these instructions, the IRS may send you a (Form 1066) and instructions from thenary income or loss from the partnership ornotice of additional tax due because the REMIC for each quarter. Do not attachS corporation. Report each related item re-amounts reported by the partnership or S Schedules Q to your return. Keep them forquired to be reported on Schedule E (in-corporation on Schedule K-1 do not match your records.cluding items of income or loss statedthe amounts you reported on your tax re-

separately on Schedule K-1) in the applica- If you are treating REMIC items onturn. ble column of a separate line following the your tax return differently from the way the line on which you reported the current year REMIC reported them on its return, youLosses Not Allowed in Prior ordinary income or loss. Also enter a may have to file Form 8082.Years Due to the At-Risk or Basis description of the related item (for exam-Limitations If you are the holder of a residual inter-ple, depletion) in column (a) of the same• Enter your total prior year unallowed est in more than one REMIC, attach a con-line.losses that are now deductible on a separate tinuation sheet using the same format as in

line in column (h) of line 28. Do not com- Part IV. Enter the combined totals of col- If you are required to file Form 8582,bine these losses with, or net them against, umns (d) and (e) on Schedule E, line 39. If

any current year amounts from the partner- see the Instructions for Form 8582 before you also completed Part I on more than one ship or S corporation. completing Schedule E. Schedule E, use the same Schedule E on

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which you entered the combined totals in Form 1040, line 43. Similarly, if the If you itemize your deductions, include this Part I. amount in column (c) is larger than your amount on Schedule A (Form 1040), line

AMTI would otherwise be, enter the 23.REMIC income or loss is not income or amount from column (c) on Form 6251,loss from a passive activity. line 28. Enter “Sch. Q” on the dotted line to the left of this amount on Form 1040, lineNote. If you are the holder of a regular 43, and Form 6251, line 28, if applicable.interest in a REMIC, do not use Schedule E Part V

to report the income you received. Instead, Note. These rules also apply to estates andreport it on Form 1040, line 8a. Summary trusts that hold a residual interest in a REMIC. Be sure to make the appropriate Line 42Column (c). Report the total of the entries on the comparable lines on Formamounts shown on Schedule(s) Q, line 2c. You will not be charged a penalty for un- 1041.This is the smallest amount you are allowed derpayment of estimated tax if:

to report as your taxable income (Form 1. Your gross farming or fishing incomeDo not include the amount1040, line 43). It is also the smallest

for 2010 or 2011 is at least two-thirds ofshown in column (c) in the totalamount you are allowed to report as your your gross income, andon Schedule E, line 39.alternative minimum taxable income

(AMTI) on Form 6251, line 28. 2. You file your 2011 tax return and pay the tax due by March 1, 2012.If the amount in column (c) is larger

than your taxable income would otherwise Column (e). Report the total of the be, enter the amount from column (c) on amounts shown on Schedule(s) Q, line 3b.

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Worksheet 1 — Excess farm loss from an interest in a partnership or S corporation involved in farming business(es) Keep for Your Records

In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farm businesses.

1. Enter the amount from your 2011 Schedule(s) E, line 31. If this amount is less than $300,000 ($150,000 if married filing separately), stop here. You do not have an excess farm loss in 2011. If more than $300,000 ($150,000 if married filing separately), continue to line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Subtract $300,000 ($150,000 if married filing separately) from line 1 . . . . . . . . . . . . 2. 3. Enter the amount from your 2011 Schedule(s) E, line 30 . . . . . . . . . . . . . . . . . . . . . 3. 4. Is line 3 greater than or equal to line 2? If yes, stop here. You do not have an excess

farm loss in 2011. If no, continue to line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Enter your net gain/loss from the sale of farming business property reported on Form

4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Enter your net gain/loss from the sale of farming business property reported on

Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Combine line 5 and line 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . 7. 8. Add line 3 and line 7. Is this greater than or equal to line 2? If yes, stop here. You do

not have an excess farm loss in 2011. If no, continue to line 9 . . . . . . . . . . . . . . . . . 8. 9. Enter the amount from your 2010 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . . . . 9.

10. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D. If zero or less, enter -0- . . . . . . . . . . . . . 10.

11. Enter the amount from your 2009 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . . . . 11. 12. Enter your combined net gain/loss from the sale of farming business property reported

on your 2009 Form 4797 and Schedule D. If zero or less, enter -0- . . . . . . . . . . . . . 12. 13. Enter the amount from your 2008 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . . . . 13. 14. Enter your combined net gain/loss from the sale of farming business property reported

on your 2008 Form 4797 and Schedule D. If zero or less, enter -0- . . . . . . . . . . . . . 14. 15. Enter the amount from your 2007 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . . . . 15. 16. Enter your combined net gain/loss from the sale of farming business property reported

on your 2007 Form 4797 and Schedule D. If zero or less, enter -0- . . . . . . . . . . . . . 16. 17. Enter the amount from your 2006 Schedule(s) E, line 32 . . . . . . . . . . . . . . . . . . . . . 17. 18. Enter your combined net gain/loss from the sale of farming business property reported

on your 2006 Form 4797 and Schedule D. If zero or less, enter -0- . . . . . . . . . . . . . 18. 19. Combine lines 9 through 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . 19. 20. Enter the greater of line 19 or $300,000 ($150,000 if married filing separately) . . . . . 20. 21. Add line 8 and line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. 22. Excess farm loss. Subtract line 1 from line 21. If zero or less, you have an excess

farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses. . . . . . . . . . . . . . . . . . . 22.

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Internal Revenue Service

2011 Instructions for Schedule F Use Schedule F (Form 1040) to report farm income and expenses. File it with Form 1040, 1040NR, 1041, 1065, or 1065-B.Profit or Loss

Your farming activity may subject you to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for moreFrom Farming information. Additional information. Pub. 225 has more information and examples to help you complete your farm tax return. It also lists important dates that apply to farmers.

• Form 4562 to claim depreciation (including the special allow- ance) on assets placed in service in 2011, to claim amortization that began in 2011, to make an election under section 179 to expense certain property, or to report information on vehicles and other listed property.

• Form 4684 to report a casualty or theft gain or loss involvingWhat’s New farm business property, including purchased livestock held for

Future developments. For the latest information about Schedule F draft, breeding, sport, or dairy purposes. See Pub. 225 for more (Form 1040), including any developments after these instructions information on how to report various farm losses, such as losses due were released, go to www.irs.gov/form1040. to death of livestock or damage to crops or other farm property.

• Form 4797 to report sales, exchanges, or involuntary conver-New merchant card reporting requirements. We added new lines sions (other than from a casualty or theft) of certain farm property.to implement reporting of farm income received via merchant card Also use this form to report sales of livestock held for draft, breed-(credit and debit cards) and third party network payments. These ing, sport, or dairy purposes.amounts are reported as “specified” income on Schedule F (Form

1040). However, for 2011, the IRS has deferred the requirement to • Form 4835 to report rental income based on crop or livestock report these amounts. Therefore, enter zero on lines 1a, 2a, 7a, 8a, shares produced by a tenant if you did not materially participate in 37a, 42a, and 43a, and report farm income on lines 1b, 2b, 7b, 8b, the management or operation of a farm. This income is not subject 37b, 42b, and 43b. See the instructions for Part I. to self-employment tax. See Pub. 225.

• Form 6198 to figure your allowable loss if you have a businessStandard mileage rate. The standard mileage rate for business use loss and you have amounts invested in the business for which youof your vehicle increased to 51 cents per mile for miles driven are not at risk.before July 1, 2011, and increased to 55.5 cents per mile for miles

• Form 8582 to figure your deductible loss from passive activi-driven after June 30, 2011. See the instructions for line 10. ties.

Information reporting requirements. New lines F and G address • Form 8824 to report like-kind exchanges.your required filing of Forms 1099 in 2011. See the line F instruc- • Form 8903 to take a deduction for income from domestictions for details and see the General Instructions for Certain Infor-

production activities.mation Returns to determine whether you are required to file any Forms 1099. Single-member limited liability company (LLC). Generally, a

single-member domestic LLC is not treated as a separate entity forHeavy highway vehicle use tax. This tax has been extended through federal income tax purposes. If you are the sole member of aSeptember 30, 2012. See Form 2290 and its instructions for the domestic LLC engaged in the business of farming, file Schedule Fextended filing deadline for 2011. (Form 1040). However, you can elect to treat a domestic LLC as a corporation. See Form 8832 for details on the election.

Heavy highway vehicle use tax. If you use certain highway trucks,General Instructions truck-trailers, tractor trailers, or buses in your farming business, you may have to pay a federal highway motor vehicle use tax. See the Instructions for Form 2290 to find out if you owe this tax and go toOther Schedules and Forms You May Have www.irs.gov/trucker for the latest developments.To File Information returns. You may have to file information returns for• Schedule E (Form 1040), Part I, to report rental income from wages paid to employees, certain payments of fees and other non-pastureland based on a flat charge. However, report on Schedule F employee compensation, interest, rents, royalties, real estate trans-(Form 1040), line 8a, pasture income received from taking care of actions, annuities, and pensions. For details, see the instructions forsomeone else’s livestock. Also use Schedule E (Form 1040), Part I, line F and the 2011 General Instructions for Certain Informationto report farm rental income and expenses of a trust or estate based Returns.on crops or livestock produced by a tenant.

If you received cash of more than $10,000 in one or more related• Schedule J (Form 1040) to figure your tax by averaging your transactions in your farming business, you may have to file Formfarm income over the previous 3 years. Doing so may reduce your 8300. For details, see Pub. 1544.tax.

• Schedule SE (Form 1040) to pay self-employment tax on Reportable transaction disclosure statement. If you entered into a income from your farming business. reportable transaction in 2011, you must file Form 8886 to disclose

• Form 3800 to claim any general business credits. information if your federal income tax liability is affected by your F-1

Cat. No. 17152RNov 04, 2011

participation in the transaction. You may have to pay a penalty if you are required to file Form 8886 but do not do so. You may also Specific Instructions have to pay interest and penalties on any reportable transaction understatements. For more information on reportable transactions, Filers of Forms 1041, 1065, and 1065-B. Do not complete the block see the Instructions for Form 8886. labeled “Social security number (SSN).” Instead, enter the em-

ployer identification number (EIN) issued to the estate, trust, or Husband-Wife Farm partnership on line D. If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you can be taxed as a partnership and file Form 1065, or you each can file Line BSchedule F (Form 1040) as a qualified joint venture.

On line B, enter one of the 14 principal agricultural activity codes Qualified Joint Venture listed in Part IV on page 2 of Schedule F (Form 1040). Select the

code that best describes the source of most of your income.If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint return for the tax year, you can elect to be treated as a qualified joint venture instead of a partnership. This election in most cases will not Line C increase the total tax owed on the joint return, but it does give each

If you use the cash method, check the box for “Cash.” Completeof you credit for social security earnings on which retirement bene- Schedule F (Form 1040), Parts I and II. In most cases, reportfits are based and for Medicare coverage without filing a partner- income in the year in which you actually or constructively receivedship return. For an explanation of “material participation,” see the it and deduct expenses in the year you paid them. However, if theinstructions for Schedule C (Form 1040), line G, and the instruc- payment of an expenditure creates an asset having a useful life thattions for line E, later, in these instructions. extends substantially beyond the close of the year, it may not be

Making the election. To make this election, you must divide all deductible or may be deductible only in part for the year of the items of income, gain, loss, deduction, and credit attributable to the payment. See chapter 2 of Pub. 225. farming business between you and your spouse in accordance with If you use an accrual method, check the box for “Accrual.” your respective interests in the venture. Each of you must file a Complete Schedule F (Form 1040), Parts II, III, and Part I, line 9. separate Schedule F (Form 1040). On each line of your separate Generally, report income in the year in which you earned it and Schedule F (Form 1040), you must enter your share of the applica- deduct expenses in the year you incurred them, even if you did not ble income, deduction, or loss. Each of you must also file a separate pay them in that year. Accrual basis taxpayers are put on a cash Schedule SE (Form 1040) to pay self-employment tax, as applica- basis for deducting business expenses owed to a related cash-basis ble. taxpayer. Other rules determine the timing of deductions based on

economic performance. See Pub. 538.As long as you remain qualified, your election cannot be re- voked without IRS consent. Farming syndicates. Farming syndicates cannot use the cash

method of accounting. A farming syndicate may be a partnership,For more information on qualified joint ventures, go to IRS.gov. LLC, S corporation, or any other enterprise other than a C corpora-Enter “qualified joint venture” in the search box and select “Elec- tion if:tion for Husband and Wife Unincorporated Businesses.”

• The interests in the business have at any time been offered for Exception—Community Income sale in a way that would require registration with any federal or

state agency, orIf you and your spouse wholly own an unincorporated farming • More than 35% of the loss during any tax year is shared bybusiness as community property under the community property

limited partners or limited entrepreneurs. A limited partner is onelaws of a state, foreign country, or U.S. possession, the income and who can lose only the amount invested or required to be invested indeductions are reported as follows. the partnership. A limited entrepreneur is a person who does not• If only one spouse participates in the business, all of the take any active part in managing the business.income from that business is the self-employment earnings of the

spouse who carried on the business. • If both spouses participate, the income and deductions are

allocated to the spouses based on their distributive shares. Line D • If either or both you and your spouse are partners in a partner- Enter on line D the employer identification number (EIN) that was

ship, see Pub. 541. issued to you on Form SS-4. Do not enter your SSN. Do not enter • If you and your spouse elected to treat the business as a another taxpayer’s EIN (for example, from any Forms 1099-MISC

qualifying joint venture, see Husband-Wife Farm, earlier. that you received.) If you do not have an EIN, leave line D blank. You need an EIN only if you have a qualified retirement plan orThe only states with community property laws are Arizona,

are required to file employment, excise, alcohol, tobacco, or fire-California, Idaho, Louisiana, Nevada, New Mexico, Texas, Wash- arms returns, or if you are a payer of gambling winnings. If youington, and Wisconsin. A change in your reporting position will be need an EIN, see the Instructions for Form SS-4.treated as a conversion of the entity. Single-member LLCs. If you are a sole owner of an LLC that is not

Estimated Tax treated as a separate entity for federal income tax purposes, you may have an EIN that was issued to the LLC (and in the LLC’s legalIf you had to make estimated tax payments for 2011 and you name) if you are required to file employment tax returns and certainunderpaid your estimated tax, you will not be charged a penalty if excise tax returns. However, you should enter on line D only theboth of the following apply. EIN issued to you and in your name as the sole proprietor of• Your gross farming or fishing income for 2010 or 2011 is at your farming business. If you do not have such an EIN, leave line

least two-thirds of your gross income, and D blank. Do not enter on line D the EIN issued to the LLC. • You file your 2011 tax return and pay the tax due by March 1,

Single-member limited liability companies (LLCs) with employees.2012. Single-member LLCs that are disregarded as entities separate from

For details, see chapter 15 of Pub. 225. their owner for federal tax purposes are required to file employment

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tax returns using the LLC’s name and employer identification num- Sales of livestock because of weather-related conditions. If you ber (EIN) rather than the LLC owner’s name and EIN. Single-mem- sold livestock because of drought, flood, or other weather-related ber LLCs not previously needing an EIN may need to obtain an EIN conditions, you can elect to report the income from the sale in the for the payment and reporting of these taxes. For more information, year after the year of sale if all of the following apply. see the Instructions for Form SS-4. • Your main business is farming. Filers of Forms 1041, 1065, and 1065-B. Enter on line D the EIN • You can show that you sold the livestock only because of issued to the estate, trust, or partnership. weather-related conditions.

• Your area qualified for federal aid.

See chapter 3 of Pub. 225 for details.Line E Material participation. For the definition of material participation Chapter 11 bankruptcy. If you were a debtor in a chapter 11 for purposes of the passive activity rules, see the instructions for bankruptcy case during 2011, see Chapter 11 Bankruptcy Cases Schedule C (Form 1040), line G. If you meet any of the material under Income in the instructions for Form 1040 and the instructions participation tests described in those instructions, check the “Yes” for Schedule SE (Form 1040). box.

Forms 1099 or CCC-1099-G. If you received Forms 1099 orIf you are a retired or disabled farmer, you are treated as materi- CCC-1099-G showing amounts paid to you, first determine if theally participating in a farming business if you materially partici- amounts are to be included with farm income. Then use the follow-pated 5 or more of the 8 years preceding your retirement or ing chart to determine where to report the income on Schedule Fdisability. Also, a surviving spouse is treated as materially partici- (Form 1040). Include the Form 1099 or CCC-1099-G amounts inpating in a farming activity if he or she actively manages the farm

and the real property used for farming meets the estate tax rules for the total amount reported on that line. special valuation of farm property passed from a qualifying dece-

Where todent. Form report

Check the “No” box if you did not materially participate. If you 1099-PATR . . . . . . . . . . . . . . . . . . . . . . . . . Line 3achecked “No” and you have a loss from this business, see Limit on

passive losses below. If you have a profit from this business activity 1099-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Line 5b but have current year losses from other passive activities or prior 1099-MISC for crop insurance . . . . . . . . . . . . Line 6a year unallowed passive activity losses, see the Instructions for Form 1099-G or CCC-1099-G 8582. • for disaster payments . . . . . . . . . . . . . . . Line 6a

• for other agricultural Limit on passive losses. If you checked the “No” box and you have program payments . . . . . . . . . . . . . . . . . Line 4aa loss from this business, you may have to use Form 8582 to figure

your allowable loss, if any, to enter on Schedule F (Form 1040), line 34. In most cases, you can deduct losses from passive activities only

Form 1099-K. If you receive merchant card or third party networkto the extent of income from passive activities. For details, see Pub. payments in 2011, you should receive a Form 1099-K showing925. those payments. Box 1 of Form 1099-K shows the amount of the payments. Merchant cards include, but are not limited to, Visa and MasterCard. Third party networks include, but are not limited to,Line F Paypal and Google Checkout.

If you made any payments in 2011 that would require you to file In some cases, you may not receive Forms 1099-K for merchantany Forms 1099, check the “Yes” box. Otherwise, check the “No”

box. See the General Instructions for Certain Information Returns if card or third party network payments that you need to include as you are unsure whether you are required to file any Forms 1099. income. Also see the separate specific instructions for each Form 1099.

For 2011, you are not required to report income received via Generally, you must file Form 1099-MISC if you paid merchant card or third party network payers, so enter zero on the at least $600 in rents, services, prizes, medical and lines for “specified” income (lines 1a, 2a, 7a, and 8a). Report all health care payments, and other income payments. The your farming income, regardless of how it was received, on lines

TIP Guide to Information Returns on page 15 of the General 1b, 2b, 7b, or 8b.

Instructions for Certain Information Returns has more information, including the due dates for the various information returns. Form 1099-MISC. You may receive Form 1099-MISC for other

types of income. In this case, report it on whichever line best describes the income, but do not include it on the line for merchant card or third party network payments. For example, if you receive aPart I. Farm Income—Cash Form 1099-MISC for custom farming work, include this amount on line 7b.Method

In Part I, show income received for items listed on lines 1 through 8b. In most cases, include both the cash actually or constructively received and the fair market value of goods or other property Line 1b received for these items. Income is constructively received when it Enter income you receive from sales of livestock and other items is credited to your account or set aside for you to use. However, you bought for resale on line 1b. direct payments or counter-cyclical payments received under the Food, Conservation, and Energy Act of 2008 are required to be included in income only in the year of actual receipt.

Line 2bIf you ran the farm yourself and received rents based on crop Enter income you receive from sales of livestock, produce, grainsshares or farm production, report these rents as income on line 2a or

2b, depending on the method of payment. See Form 1099-K later. and other products you raised on line 2b.

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Forfeited CCC loans. Include the full amount forfeited on line 5b, Lines 3a and 3b even if you reported the loan proceeds as income. This amount may

be reported to you on Form 1099-A.If you received distributions from a cooperative in 2011, you should receive a Form 1099-PATR. On line 3a, show your total distribu- If you did not elect to report the loan proceeds as income, also tions from cooperatives. This includes patronage dividends, nonpa- include the forfeited amount on line 5c. tronage distributions, per-unit retain allocations, and redemptions

If you did elect to report the loan proceeds as income, youof nonqualified written notices of allocation and per-unit retain generally will not have an entry on line 5c. But if the amountcertificates. forfeited is different from your basis in the commodity, you may have an entry on line 5c.Show patronage dividends received in cash and the dollar

amount of qualified written notices of allocation. If you received See chapter 3 of Pub. 225 for details on the tax consequences of property as patronage dividends, report the fair market value of the electing to report CCC loan proceeds as income or forfeiting CCC property as income. Include cash advances received from a market- loans. ing cooperative. If you received per-unit retains in cash, show the If you received a CCC loan in 2011, your farm losses may be amount of cash. If you received qualified per-unit retain certifi- reduced or eliminated. See Excess farm loss rules, later, for more cates, show the stated dollar amount of the certificates. details.

Do not include as income on line 3b patronage dividends from buying personal or family items, capital assets, or depreciable as- sets. Enter these amounts on line 3a only. Because you do not report Lines 6a Through 6d patronage dividends from these items as income, you must subtract

In most cases, you must report crop insurance proceeds in the yearthe amount of the dividend from the cost or other basis of these you receive them. Federal crop disaster payments are treated asitems. crop insurance proceeds. However, if 2011 was the year of damage, you can elect to include certain proceeds in income for 2012. To make this election, check the box on line 6c and attach a statement to your return. See chapter 3 of Pub. 225 for a description of theLines 4a and 4b proceeds for which an election can be made and for what you mustEnter on line 4a the total of the following amounts. include in your statement.• Direct payments.

In most cases, if you elect to defer any eligible crop insurance• Counter-cyclical payments. proceeds, you must defer all such crop insurance proceeds (includ- • Price support payments. ing federal crop disaster payments). • Market gain from the repayment of a secured Commodity Enter on line 6a the total crop insurance proceeds you received

Credit Corporation (CCC) loan for less than the original loan in 2011, even if you elect to include them in income for 2012. amount.

Enter on line 6b the taxable amount of the proceeds you received• Diversion payments. in 2011. Do not include proceeds you elect to include in income for• Cost-share payments (sight drafts). 2012.

• Payments in the form of materials (such as fertilizer or lime) or Enter on line 6d the amount, if any, of crop insurance proceedsservices (such as grading or building dams). you received in 2010 and elected to include in income for 2011.

These amounts are government payments you received and are Line 7busually reported to you on Form 1099-G. You may also receive Form CCC-1099-G from the Department of Agriculture showing Enter income you receive from custom hire (machine work) on line the amounts and types of payments made to you. 7b.

On line 4b, report only the taxable amount. For example, do not report the market gain shown on Form CCC-1099-G on line 4b if

Line 8byou elected to report CCC loan proceeds as income in the year received (see Lines 5a Through 5c next). No gain results from Enter on line 8b income not otherwise reportable on lines 1 through redemption of the commodity because you previously reported the 7b. This includes the following types of income. CCC loan proceeds as income. You are treated as repurchasing the • Illegal federal irrigation subsidies. See chapter 3 of Pub. 225.commodity for the amount of the loan repayment. However, if you

• Bartering income.did not report the CCC loan proceeds under the election, you must report the market gain on line 4b. • Income from cancellation of debt. In most cases, if a debt is

canceled or forgiven, you must include the canceled amount in If you received a direct or counter-cyclical payment in 2011, income. If a federal agency, financial institution, or credit union

your farm losses may be reduced or eliminated. See Excess farm canceled or forgave a debt you owed of $600 or more, it should send loss rules, later, for more details. you a Form 1099-C, or similar statement, by January 31, 2012,

showing the amount of debt canceled in 2011. However, you may be able to exclude the canceled debt from income. See Pub. 4681 for details.Lines 5a Through 5c • State gasoline or fuel tax refunds you received in 2011.

Commodity Credit Corporation (CCC) loans. In most cases, you • The amount of credit for alcohol and cellulosic biofuel fuelsdo not report CCC loan proceeds as income. However, if you claimed on Form 6478.pledge part or all of your production to secure a CCC loan, you can • The amount of credit for biodiesel and renewable diesel fuelselect to report the loan proceeds as income in the year you receive

claimed on Form 8864.them. If you make this election (or made the election in a prior year), report loan proceeds you received in 2011 on line 5a. Attach a • The amount of credit for federal tax paid on fuels claimed on statement to your return showing the details of the loan(s). See your 2010 Form 1040. For information on including the credit in chapter 3 of Pub. 225. income, see chapter 2 of Pub. 510.

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• Any recapture of excess depreciation on any listed property, the total amount capitalized in parentheses on line 32f (to indicate a including any section 179 expense deduction, if the business use negative amount) and enter “263A” in the space to the left of the percentage of that property decreased to 50% or less in 2011. Use total. See Preproductive period expenses, later, for details. Part IV of Form 4797 to figure the recapture. See the instructions But you may be able to currently deduct rather than capitalizefor Schedule C (Form 1040), line 13, for the definition of listed the expenses of producing a plant with a preproductive period ofproperty. more than 2 years. See Election to deduct certain preproductive• The inclusion amount on leased listed property (other than period expenses next. vehicles) when the business use percentage drops to 50% or less.

Election to deduct certain preproductive period expenses. If theSee chapter 5 of Pub. 946 to figure the amount. preproductive period of any plant you produce is more than 2 years,• Any recapture of the deduction for clean-fuel vehicles and you can elect to currently deduct the expenses rather than capitalizeclean-fuel vehicle refueling property used in your farming business. them. But you cannot make this election for the costs of planting orFor details on how to figure recapture, see Regulations section growing citrus or almond groves incurred before the end of the1.179A-1. fourth tax year beginning with the tax year you planted them in their• Any income from breeding fees, or fees from renting teams, permanent grove. You are treated as having made the election by

machinery, or land. deducting the preproductive period expenses in the first tax year for • The gain or loss on the sale of commodity futures contracts if which you can make this election and by applying the special rules,

the contracts were made to protect you from price changes. These discussed later. are a form of business insurance and are considered hedges. If you

In the case of a partnership or S corporation, the electionhad a loss in a closed futures contract, enclose the amount of the must be made by the partner, shareholder, or member.loss in parentheses. This election cannot be made by tax shelters, farming

For property acquired and hedging positions estab- syndicates, partnerships, or corporations required to use lished, you must clearly identify on your books and the accrual method of accounting under section 447 or 448(a)(3). records both the hedging transaction and the item(s) or

Unless you obtain IRS consent, you must make this election foraggregate risk being hedged. the first tax year in which you engage in a farming business involv-

Purchase or sales contracts are not true hedges if they offset ing the production of property subject to the capitalization rules. losses that already occurred. If you bought or sold commodity You cannot revoke this election without IRS consent. futures with the hope of making a profit due to favorable price Special rules. If you make the election to deduct preproductivechanges, report the profit or loss on Form 6781 instead of this line. expenses for plants:

• Any gain you realize when disposing of the plants is ordinary income up to the amount of the preproductive expenses you de-

Line 9 ducted, and • The alternative depreciation rules apply to property placed inSince lines 1a, 2a, 7a, and 8a are zero, enter on line 9 the total of

service in any tax year your election is in effect.amounts from lines 1e, 2b, 3b, 4b, 5a, 5c, 6b, 6d, 7b, and 8b.

For details, see Uniform Capitalization Rules in chapter 6 of Pub. 225.

Prepaid farm supplies. In most cases, if you use the cash method ofPart II. Farm Expenses accounting and your prepaid farm supplies are more than 50% of

Do not deduct the following. your other deductible farm expenses, your deduction for those • Personal or living expenses (such as taxes, insurance, or re- supplies may be limited. Prepaid farm supplies include expenses for

pairs on your home) that do not produce farm income. feed, seed, fertilizer, and similar farm supplies not used or con- sumed during the year.• Expenses of raising anything you or your family used.

• The value of animals you raised that died. They also include the cost of poultry that would be allowable as a deduction in a later tax year if you were to:• Inventory losses.

• Personal losses. 1. Capitalize the cost of poultry bought for use in your farming business and deduct it ratably over the lesser of 12 months or theIf you were repaid for any part of an expense, you must subtract useful life of the poultry, andthe amount you were repaid from the deduction.

2. Deduct the cost of poultry bought for resale in the year you Capitalizing costs of property. If you produced real or tangible sell or otherwise dispose of it. personal property or acquired property for resale, certain expenses must be included in inventory costs or capitalized. These expenses If the limit applies, you can deduct prepaid farm supplies that do include the direct costs of the property and the share of any indirect not exceed 50% of your other deductible farm expenses in the year costs allocable to that property. However, these rules generally do of payment. You can deduct the excess only in the year you use or not apply to expenses of: consume the supplies (other than poultry, which is deductible as

explained above). For details and exceptions to these rules, see1. Producing any plant that has a preproductive period of 2 years chapter 4 of Pub. 225.or less,

Whether or not this 50% limit applies, your expenses for live-2. Raising animals, or stock feed paid during the year but consumed in a later year may be3. Replanting certain crops if they were lost or damaged by subject to the rules explained in the line 16 instructions.reason of freezing temperatures, disease, drought, pests, or casualty.

Exceptions (1) and (2) do not apply to tax shelters, farming syndicates, partnerships, or corporations re- Line 10 quired to use the accrual method of accounting under You can deduct the actual expenses of operating your car or truck orsection 447 or 448(a)(3). take the standard mileage rate. You must use actual expenses if you

If you capitalize your expenses, do not reduce your deductions used your vehicle for hire or you used five or more vehicles simulta- on lines 10 through 32e by the capitalized expenses. Instead, enter neously in your farming business (such as in fleet operations). You

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cannot use actual expenses for a leased vehicle if you previously Line 13used the standard mileage rate for that vehicle. Enter amounts paid for custom hire or machine work (the machineYou can take the standard mileage rate for 2011 only if you: operator furnished the equipment).• Owned the vehicle and used the standard mileage rate for the

first year you placed the vehicle in service, or Do not include amounts paid for rental or lease of equipment you operated yourself. Instead, report those amounts on line 24a.• Leased the vehicle and are using the standard mileage rate for

the entire lease period.

If you take the standard mileage rate: Line 14• Multiply the number of business miles driven before July 1 by 51 cents, and the number of business miles driven after June 30 by You can deduct depreciation of buildings, improvements, cars and 55.5 cents, and trucks, machinery, and other farm equipment of a permanent nature.

• Add to this amount your parking fees and tolls, and enter the Do not deduct depreciation on your home, furniture or othertotal on line 10.

personal items, land, livestock you bought or raised for resale, or other property in your inventory.Do not deduct depreciation, rent or lease payments, or your

actual operating expenses. You can also elect under section 179 to expense a portion of the

If you deduct actual expenses: cost of certain property you bought in 2011 for use in your farming business. The section 179 election is made on Form 4562.• Include on line 10 the business portion of expenses for gaso-

line, oil, repairs, insurance, tires, license plates, etc., and For information about depreciation and the section 179 deduc-• Show depreciation on line 14 and rent or lease payments on tion, see Pub. 946 and chapter 7 of Pub. 225. For details on theline 24a. special depreciation allowance, see chapter 3 of Pub. 946.

If you claim any car or truck expenses (actual or the standard See the Instructions for Form 4562 for information on when youmileage rate), you must provide the information requested on Form

must complete and attach Form 4562.4562, Part V. Be sure to attach Form 4562 to your return.

For details, see chapter 4 of Pub. 463.

Line 15 Deduct contributions to employee benefit programs that are not anLine 12 incidental part of a pension or profit-sharing plan included on line 23. Examples are accident and health plans, group-term life insur-Deductible conservation expenses generally are those that are paid ance, and dependent care assistance programs. If you made contri-to conserve soil and water for land used in farming, to prevent butions on your behalf as a self-employed person to a dependenterosion of land used for farming, or for endangered species recov- care assistance program, complete Form 2441, Parts I and III, toery. These expenses include (but are not limited to) costs for the figure your deductible contributions to that program.following.

• The treatment or movement of earth, such as leveling, grading, Contributions you made on your behalf as a self-employedconditioning, terracing, contour furrowing, and the restoration of person to an accident and health plan or for group-term life insur-soil fertility. ance are not deductible on Schedule F (Form 1040). However, you• The construction, control, and protection of diversion chan- may be able to deduct on Form 1040, line 29 (or on Form 1040NR, nels, drainage ditches, irrigation ditches, earthen dams, water- line 29), the amount you paid for health insurance on behalf of courses, outlets, and ponds. yourself, your spouse, and dependent(s) even if you do not itemize

• The eradication of brush. your deductions. See the instructions for Form 1040, line 29, or Form 1040NR, line 29, for details.• The planting of windbreaks.

• The achievement of site-specific management actions recom- You must reduce your line 15 deduction by the amount of anymended in recovery plans approved pursuant to the Endangered credit for small employer health insurance premiums determined onSpecies Act of 1973. Form 8941. See Form 8941 and its instructions to determine which expenses are eligible for the credit.These expenses can be deducted only if they are consistent with

a conservation plan approved by the Natural Resources Conserva- tion Service of the Department of Agriculture or a recovery plan approved pursuant to the Endangered Species Act of 1973, for the Line 16 area in which your land is located. If no plan exists, the expenses

If you use the cash method, you cannot deduct when paid the cost ofmust be consistent with a plan of a comparable state agency. You feed your livestock will consume in a later year unless all of thecannot deduct the expenses if they were paid or incurred for land following apply.used in farming in a foreign country.

• The payment was for the purchase of feed rather than a de- Do not deduct expenses you paid or incurred to drain or fill posit.

wetlands, or to prepare land for center pivot irrigation systems. • The prepayment had a business purpose and was not made merely to avoid tax.Your deduction cannot exceed 25% of your gross income from

• Deducting the prepayment will not materially distort yourfarming (excluding certain gains from selling assets such as farm income.machinery and land). If your conservation expenses are more than

the limit, the excess can be carried forward and deducted in later tax If all of the above apply, you can deduct the prepaid feed whenyears. However, the amount deductible for any one year cannot

paid, subject to the overall limit for Prepaid farm supplies explainedexceed the 25% gross income limit for that year. earlier. If all of the above do not apply, you can deduct the prepaid

For details, see chapter 5 of Pub. 225. feed only in the year it is consumed.

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If you provided taxable fringe benefits to your employ- Line 18 ees, such as personal use of a car, do not include in farm

labor the amounts you depreciated or deducted else-Do not include the cost of transportation incurred in purchasing where.livestock held for resale as freight paid. Instead, add these costs to

the cost of the livestock.

Line 23 Line 20 Enter your deduction for contributions to employee pension,

profit-sharing, or annuity plans. If the plan included you as aDeduct on this line premiums paid for farm business insurance. self-employed person, enter contributions made as an employer onDeduct on line 15 amounts paid for employee accident and health your behalf on Form 1040, line 28 (or on Form 1040NR, line 28),insurance. Amounts credited to a reserve for self-insurance or pre- not on Schedule F (Form 1040).miums paid for a policy that pays for your lost earnings due to

sickness or disability are not deductible. For details, see chapter 6 of In most cases, you must file the applicable form listed next if Pub. 535. you maintain a pension, profit-sharing, or other funded-deferred

compensation plan. The filing requirement is not affected by whether or not the plan qualified under the Internal Revenue Code, or whether or not you claim a deduction for the current tax year.Lines 21a and 21b There is a penalty for failure to timely file these forms.

Interest allocation rules. The tax treatment of interest expense dif- Form 5500-EZ. File this form if you have a one-participant retire-fers depending on its type. For example, home mortgage interest ment plan that meets certain requirements. A one-participant plan isand investment interest are treated differently. “Interest allocation” a plan that covers only you (or you and your spouse).rules require you to allocate (classify) your interest expense so it is

deducted (or capitalized) on the correct line of your return and Form 5500-SF. File this form if you have a small plan (fewer than receives the right tax treatment. These rules could affect how much 100 participants in most cases) that meets certain requirements. interest you are allowed to deduct on Schedule F (Form 1040).

Form 5500. File this form for a plan that does not meet the require- In most cases, you allocate interest expense by tracing how the ments for filing Form 5500-EZ or Form 5500-SF.

proceeds of the loan are used. See chapter 4 of Pub. 535 for details. For details, see Pub. 560.

If you paid interest on a debt secured by your main home and any of the proceeds from that debt were used in your farming business, see chapter 4 of Pub. 535 to figure the amount to include on lines 21a and 21b. Lines 24a and 24b

If you rented or leased vehicles, machinery, or equipment, enter onHow to report. If you have a mortgage on real property used in line 24a the business portion of your rental cost. But if you leased ayour farming business (other than your main home), enter on line vehicle for a term of 30 days or more, you may have to reduce your21a the interest you paid for 2011 to banks or other financial deduction by an inclusion amount. See Leasing a Car in chapter 4 ofinstitutions for which you received a Form 1098 (or similar state- Pub. 463 to figure this amount.ment). If you did not receive a Form 1098, enter the interest on line

21b. Enter on line 24b amounts paid to rent or lease other property such as pasture or farmland.If you paid more mortgage interest than is shown on Form 1098,

see chapter 4 of Pub. 535 to find out if you can deduct the additional interest. If you can, include the amount on line 21a. Attach a statement to your return explaining the difference and enter “See Line 25 attached” in the margin next to line 21a.

Enter amounts you paid for incidental repairs and maintenance of If you and at least one other person (other than your spouse if farm buildings, machinery, and equipment that do not add to the

you file a joint return) were liable for and paid interest on the property’s value or appreciably prolong its life. mortgage and the other person received the Form 1098, include

Do not deduct repairs or maintenance on your home.your share of the interest on line 21b. Attach a statement to your return showing the name and address of the person who received the Form 1098. In the margin next to line 21b, enter “See attached.”

Line 29Do not deduct interest you prepaid in 2011 for later years; include only the part that applies to 2011. You can deduct the following taxes on this line.

• Real estate and personal property taxes on farm business as- sets.

Line 22 • Social security and Medicare taxes you paid to match what you are required to withhold from farm employees’ wages withoutEnter the amounts you paid for farm labor. Do not include amounts consideration for the temporary employee payroll tax cut for 2011.paid to yourself. Reduce your deduction by the amounts claimed

on: • Federal unemployment tax. • Form 5884, Work Opportunity Credit, line 2; • Federal highway use tax. • Form 8844, Empowerment Zone and Renewal Community • Contributions to state unemployment insurance fund or disa-

Employment Credit, line 2; bility benefit fund if they are considered taxes under state law. • Form 8845, Indian Employment Credit, line 4; and Do not deduct the following taxes on this line. • Form 8932, Credit for Employer Differential Wage Payments, • Federal income taxes, including your self-employment tax.

line 2. However, you can deduct your employer-equivalent portion of self-employment tax on Form 1040, line 27 or Form 1040NR, lineInclude the cost of boarding farm labor but not the value of any 27.products they used from the farm. Include only what you paid

household help to care for farm laborers. • Estate and gift taxes. F-7

• Taxes assessed for improvements, such as paving and sewers. and entertainment. But there are exceptions and limitations. See the instructions for Schedule C (Form 1040), lines 24a and 24b.• Taxes on your home or personal use property.

• State and local sales taxes on property purchased for use in Preproductive period expenses. If you had preproductive period your farming business. Instead, treat these taxes as part of the cost expenses in 2011 that you are capitalizing, enter the total of these of the property. expenses in parentheses on line 32f (to indicate a negative amount)

• Other taxes not related to your farming business. and enter “263A” in the space to the left of the total. For details, see Capitalizing costs of property, earlier, and Uni-

form Capitalization Rules in chapter 6 of Pub. 225. Line 30 Enter amounts you paid for gas, electricity, water, and other utilities for business use on the farm. Do not include personal utilities. You Line 33 cannot deduct the base rate (including taxes) of the first telephone

If line 32f is a negative amount, subtract it from the total of lines 10line into your residence, even if you use it for your farming busi- through 32e. Enter the result on line 33.ness. But you can deduct expenses you paid for your farming

business that are more than the cost of the base rate for the first phone line. For example, if you had a second phone line, you can deduct the business percentage of the charges for that line, includ- Line 34 ing the base rate charges.

If you have a loss, the amount of loss you can deduct this year may be limited. If you checked the “No” box on line E, also see the Instructions for Form 8582.

Lines 32a Through 32f Individuals. Enter your net profit or deductible loss here and on

Include all ordinary and necessary farm expenses not deducted Form 1040, line 18, and Schedule SE (Form 1040), line 1a. Com- elsewhere on Schedule F (Form 1040), such as advertising, office plete lines 35 and 36 before entering the loss on line 34. supplies, etc. Do not include fines or penalties paid to a government for violating any law. Nonresident aliens. Enter the net profit or deductible loss here and

on Form 1040NR, line 19. You should also enter this amount on At-risk loss deduction. Any loss from this activity that was not Schedule SE (Form 1040), line 1a if you are covered under the U.S.allowed as a deduction last year because of the at-risk rules is social security system due to an international social security agree-treated as a deduction allocable to this activity in 2011. However, ment currently in effect. See the Schedule SE (Form 1040) instruc-for the loss to be deductible, the amount “at risk” must be increased. tions for information on international social security agreements. Bad debts. See chapter 10 of Pub. 535.

Partnerships. Enter the net profit or deductible loss here and on Business start-up costs. If your farming business began in 2011, Form 1065, line 5 (or Form 1065-B, line 7). Because the excess you can elect to deduct up to $5,000 of certain business start-up farm loss rules are applied at the partner level, the partnership will costs paid or incurred after October 22, 2004. The $5,000 limit is notify each partner on the Schedule K-1 if the partnership received reduced (but not below zero) by the amount by which your start-up one of the subsidies discussed later. Each partner should complete costs exceed $50,000. Your remaining start-up costs can be amor- one of the excess farm loss worksheets to determine if there is an tized over a 180-month period, beginning with the month the farm- excess farm loss. ing business began. For details, see chapters 4 and 7 of Pub. 225.

Trusts and estates. Enter the net profit or deductible loss here andFor amortization that begins in 2011, you must complete and attach on Form 1041, line 6. If you have a loss, complete lines 35 and 36 toForm 4562. determine if your loss is limited before entering the loss on line 34.

Business use of your home. You may be able to deduct certain Community income. If you and your spouse had community in-expenses for business use of your home, subject to limitations. Use come and are filing separate returns, see the instructions for Sched-the worksheet in Pub. 587 to figure your allowable deduction. Do ule SE (Form 1040) before figuring self-employment tax.not use Form 8829.

Forestation and reforestation costs. Reforestation costs are gener- Earned income credit. If you have a net profit on line 34, this ally capital expenditures. However, for each qualified timber prop- amount is earned income and may qualify you for the earned in- erty, you can elect to expense up to $10,000 ($5,000 if married come credit if you meet certain conditions. See the instructions for filing separately) of qualifying reforestation costs paid or incurred Form 1040, lines 64a and 64b, for details. in 2011.

Conservation Reserve Program (CRP) payments. If you received You can elect to amortize the remaining costs over 84 months. social security retirement or disability benefits in addition to CRP

For amortization that begins in 2011, you must complete and attach payments, the CRP payments are not subject to self-employment Form 4562. tax. You will deduct these payments from your net farm profit or

The amortization election does not apply to trusts, and the ex- loss on Schedule SE (Form 1040), line 1b. Do not make any adjust- pense election does not apply to estates and trusts. For details on ment on Schedule F (Form 1040). reforestation expenses, see chapters 4 and 7 of Pub. 225.

Legal and professional fees. You can include on this line fees charged by accountants and attorneys that are ordinary and neces- Line 35 sary expenses directly related to your farming business. Include

Excess farm loss rules. If you received certain subsidies in 2011,fees for tax advice and for the preparation of tax forms related to your farm loss may be reduced or eliminated. Check the “Yes” boxyour farming business. Also include expenses incurred in resolving if you received one of the subsidies discussed next. Otherwise,asserted tax deficiencies related to your farming business. check the “No” box.

Tools. You can deduct the amount you paid for tools that have a • Any direct or counter-cyclical payments under title I of the short life or cost a small amount, such as shovels and rakes. Food, Conservation, and Energy Act of 2008 (or any payment you

elected instead of this payment).Travel, meals, and entertainment. In most cases, you can deduct expenses for farm business travel and 50% of your business meals • Any Commodity Credit Corporation loan.

F-8

Your excess farm loss for a year is the amount by which your If you file multiple copies of Schedule F (Form 1040), Schedule total deductions from your farming business(es) exceed your total C (Form 1040), or Schedule E (Form 1040) as part of your farming gross income or gain from your farming business(es), plus a thresh- businesses, you must combine the income, deductions, and net gain/ old amount. The threshold amount is the greater of $300,000 loss for purposes of determining whether you have an excess farm ($150,000 if your filing status is married filing separately) or your loss on the worksheets. If you sold any property used in your total net profit or loss from farming business(es) for the last five farming businesses, you must include any gain or loss on the sale of years (2006-2010), including for each of those years any net gain that property (reported on Form 4797, Sales of Business Property, from the sale of property used in your farming business(es). To or Schedule D (Form 1040), Capital Gains and Losses). Be sure to determine if you have an excess farm loss, use one of the work- include the gain or loss attributable to property used in your farming sheets. business(es), as defined earlier in Farming business defined. Do not

include gain or loss attributable to property used in nonfarmingFarming business defined. For purposes of calculating your ex- business(es) or nonbusiness property.cess farm loss for the year, farming business has the meaning used

in section 263A(e)(4) (generally the trade or business of farming, Effect on other deductions. Certain deductions, including theincluding operating a nursery or sod farm or raising or harvesting of domestic production activities deduction under section 199 and thetrees bearing fruit, nuts, or other crops, or ornamental trees, such as deduction for the employer-equivalent portion of self-employmentevergreen trees, if they are cut within the first 6 years). tax, may need to be included when determining your excess farm Farming business also includes the trade or business of process- losses if the deductions are attributable to your farming business, as

ing a farm commodity even if it is not incidental to your farm. defined earlier. Additionally, farming business includes participating in a coopera-

In particular, the deduction for the employer-equivalent portiontive that processes a farm commodity. As a result, any activity of self-employment tax will not be attributable to your farmingreported on Schedule C (Form 1040) that involves processing a business on Schedule F (Form 1040) or your business of processingfarm commodity must be included when determining your excess a farm commodity on Schedule C (Form 1040) if the combinedfarm loss, and any losses from that Schedule C (Form 1040) activity amounts on those schedules produce a loss. But the deduction formay be limited by the excess farm loss rules. Farming business also the employer-equivalent portion of self-employment tax should beincludes any interest in a partnership or S corporation involved in a taken into account when the combined amounts on those schedulesfarming business. produce income (or the farm optional method on Schedule SEThe worksheets may be used to determine if you have an excess (Form 1040) is used) and there is a large loss on Schedule E (Formfarm loss. These worksheets are provided for your recordkeeping 1040) passed through from a partnership or S corporation.purposes only, and which worksheet you should use will depend on

the nature and extent of your farming business(es).

Any excess farm loss not allowed in 2011 may be carried for- Line 36ward and deducted on Schedule F (Form 1040) in the first year in

which you do not have an excess farm loss. In determining your At-risk rules. In most cases, if you have a loss from a farming excess farm loss for a year in which you received a subsidy de- activity and amounts invested in the activity for which you are not scribed above, do not take into account any deduction for losses at risk, you must complete Form 6198 to figure your allowable loss. from fire, storm, or other casualty, or from disease or drought The at-risk rules generally limit the amount of loss (including loss involving any farming business. Also, you must determine your on the disposition of assets) you can claim to the amount you could excess farm loss before calculating any limits due to passive activ- actually lose in the activity. ity on Form 8582.

Check box 36b if you have amounts invested in this activity forIf you checked “Yes” on line 35, use one of the worksheets in which you are not at risk, such as the following.these instructions to determine if you have an excess farm loss that

reduces the amount of loss you can deduct this year. If you have • Nonrecourse loans used to finance the activity, to acquire more than one farming business with an overall loss this year, property used in the activity, or to acquire the activity that are not allocate the excess farm loss amount on a pro rata basis among secured by your own property (other than property used in the those farming businesses after determining if your loss is further activity). However, there is an exception for certain nonrecourse limited by the at-risk rules, later. financing borrowed by you in connection with holding real prop-

erty.Excess farm loss worksheets. You may complete one of these worksheets to determine if you have an excess farm loss in 2011. • Cash, property, or borrowed amounts used in the activity (or Do not attach these worksheets to your return; keep them for your contributed to the activity, or used to acquire the activity) that are records. You will need them next year when any excess farm loss protected against loss by a guarantee, stop-loss agreement, or other may be deducted, as discussed above. Which worksheet you should similar arrangement (excluding casualty insurance and insurance use depends on your farming business, or businesses, as explained against tort liability). in Farming business defined, earlier. • Amounts borrowed for use in the activity from a person who• Use Worksheet 1 if your farming business(es) include only has an interest in the activity, other than as a creditor, or who is profit or loss reported on Schedule F (Form 1040), (including related under section 465(b)(3)(C) to a person (other than you) multiple copies of Schedule F (Form 1040)). having such an interest.

• Use Worksheet 2 if your farming businesses include Schedule Figuring your deductible loss. Before determining your deductibleF (Form 1040) and any Schedule C (Form 1040) activity of process- loss, you must check box 36a or 36b to determine if your loss oning a farm commodity. line 34 is further limited by the at-risk rules. Follow the instructions• Use Worksheet 3 if your farming businesses include Schedule below that apply to your box 36 activity.F (Form 1040) and a Schedule E (Form 1040) interest in a partner-

ship or S corporation involved in a farming business. If all your investment amounts are at risk in this activity, check • Use Worksheet 4 if your farming businesses include Schedule box 36a. If you checked the “Yes” box on Schedule F (Form 1040),

F (Form 1040), Schedule C (Form 1040) activity of processing a line E, enter your loss on line 34 and on Form 1040, line 18, and farm commodity, a Schedule E (Form 1040) interest in a partner- Schedule SE (Form 1040), line 1a. Nonresident aliens – enter the ship or S corporation involved in a farming business, and farm deductible loss on Form 1040NR, line 19 (and Schedule SE (Form rental income or loss reported on Form 4835. 1040), line 1a if applicable – see Nonresident aliens under the line

34 instructions, earlier). Estates and trusts – enter the deductible• Use Worksheet 5 if your farming business is limited to only loss on Form 1041, line 6.farm rental income or loss reported on Form 4835.

F-9

But if you checked the “No” box on Schedule F (Form 1040), If you checked box 36b because some investment is not line E, you may need to complete Form 8582 to figure your allowa- at risk and you do not attach Form 6198, the processing ble loss to enter on line 34. See the Instructions for Form 8582. of your return may be delayed.

If some investment is not at risk, check box “b.” If you checked “Yes” on line 35, use one of the worksheets to determine if you

Any loss from this activity not allowed for 2011 only because ofhave an excess farm loss that reduces the amount of loss you can the at-risk rules is treated as a deduction allocable to the activity indeduct this year. If you have more than one farming business with 2012.an overall loss this year, allocate the excess farm loss amount on a

pro rata basis among those farming businesses. For details, see Pub. 925 and the Instructions for Form 6198. If you checked the “Yes” box on Schedule F (Form 1040), line

E, first complete Form 6198 to determine the amount of your deductible loss and enter that amount on Form 1040, line 18, and Schedule SE (Form 1040), line 1a. Nonresident aliens – enter the Part III. Farm Income—Accrualdeductible loss on Form 1040NR, line 19 (and Schedule SE (Form 1040), line 1a if applicable – see Nonresident aliens under the line Method 34 instructions, earlier). Estates and trusts – enter the deductible

You may be required to use the accrual accounting method. If youloss on Form 1041, line 6. Partnerships – do not complete Form use the accrual method, report farm income when you earn it, not6198; enter your profit or loss on line 34 and on Form 1065, line 5 when you receive it. In most cases, you must include animals and(or Form 1065-B, line 7). crops in your inventory if you use this method. See Pub. 225 forBut if you checked the “No” box on Schedule F (Form 1040), exceptions, inventory methods, how to change methods of account-line E, see the Instructions for Form 8582 to determine your further ing, and rules that require certain costs to be capitalized or includedloss limitation. If your at-risk amount is zero or less, enter -0- on in inventory. For information about accounting periods, see Pub.line 34. Be sure to attach Form 6198 to your return. 538, Accounting Periods and Methods.

If you checked “No” on line 35, complete Form 6198 to deter- mine the amount of your deductible loss. If you checked the “Yes” Chapter 11 bankruptcy. If you were a debtor in a chapter 11 box on Schedule F (Form 1040), line E, enter that amount on line 34 bankruptcy case during 2011, see the instructions for Form 1040 and on Form 1040, line 18, and Schedule SE (Form 1040), line 1a. and the instructions for Schedule SE (Form 1040). Nonresident aliens – enter the deductible loss on Form 1040NR, line 19 (and Schedule SE (Form 1040), line 1a if applicable – see Nonresident aliens under the line 34 instructions, earlier). Estates

Lines 37b Through 42band trusts – enter the deductible loss on Form 1041, line 6. Partner- ships – do not complete Form 6198; enter your profit or loss on line See the instructions for lines 2a through 7b. 34 and on Form 1065, line 5 (or Form 1065-B, line 7).

But if you checked the “No” box on Schedule F (Form 1040), line E, see the Instructions for Form 8582 to determine your further Line 43bloss limitation. If your at-risk amount is zero or less, enter -0- on line 34. Be sure to attach Form 6198 to your return. See the instructions for line 8b.

F-10

Excess Farm Loss Worksheet 1—Schedule F (Form 1040) farming business only Keep for Your Records

CAUTION: In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farming business.

1. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 33. Is this amount less than $300,000 ($150,000 if married filing separately)? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Subtract $300,000 ($150,000 if married filing separately) from line 1 . . . . . 2.

3. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 9 . . . . . 3.

4. Is line 3 greater than or equal to line 2? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 5.

5. Enter your net gain/loss from the sale of farming business property reported on Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6. Enter your net gain/loss from the sale of farming business property reported on Schedule D (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7. Combine line 5 and line 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8. Add line 3 and line 7. Is this greater than or equal to line 2? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

9. Enter the amount from your 2010 Schedule(s) F (Form 1040), line 36 . . . . 9.

10. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the amount from your 2009 Schedule(s) F (Form 1040), line 36 . . . . 11.

12. Enter your combined net gain/loss from the sale of farming business property reported on your 2009 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Enter the amount from your 2008 Schedule(s) F (Form 1040), line 36 . . . . 13.

14. Enter your combined net gain/loss from the sale of farming business property reported on your 2008 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

15. Enter the amount from your 2007 Schedule(s) F (Form 1040), line 36 . . . . 15.

16. Enter your combined net gain/loss from the sale of farming business property reported on your 2007 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.

17. Enter the amount from your 2006 Schedule(s) F (Form 1040), line 36 . . . . 17.

18. Enter your combined net gain/loss from the sale of farming business property reported on your 2006 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Combine lines 9 through 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.

20. Enter the greater of line 19 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . . 20.

21. Add line 8 and line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Excess farm loss. Subtract line 1 from line 21. If zero or less, you have an excess farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses . . . . . . . . . . . . . 22.

F-11

Excess Farm Loss Worksheet 2—Schedule F (Form 1040) farming business(es) and Schedule C (Form 1040) activity of processing a farm commodity Keep for Your Records

CAUTION: In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farming businesses.

1. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 33 . . . . 1.

2. Enter the total amount from your 2011 Schedule(s) C (Form 1040), line 28 and line 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Add lines 1 and 2. Is this amount less than $300,000 ($150,000 if married filing separately)? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Subtract $300,000 ($150,000 if married filing separately) from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 9 . . . . . 5.

6. Enter the amount from your 2011 Schedule(s) C (Form 1040), line 7 . . . . . 6.

7. Combine line 5 and line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8. Is line 7 greater than or equal to line 4? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 9.

9. Enter your net gain/loss from the sale of farming business property reported on Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Enter your net gain/loss from the sale of farming business property reported on Schedule D (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Combine line 9 and line 10. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Add line 7 and line 11. Is this greater than or equal to line 4? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Enter the amount from your 2010 Schedule(s) F (Form 1040), line 36 . . . . 13.

14. Enter the amount from your 2010 Schedule(s) C (Form 1040), line 31 . . . . 14.

15. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.

16. Enter the amount from your 2009 Schedule(s) F (Form 1040), line 36 . . . . 16.

17. Enter the amount from your 2009 Schedule(s) C (Form 1040), line 31 . . . . 17.

18. Enter your combined net gain/loss from the sale of farming business property reported on your 2009 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Enter the amount from your 2008 Schedule(s) F (Form 1040), line 36 . . . . 19.

20. Enter the amount from your 2008 Schedule(s) C (Form 1040), line 31 . . . . 20.

F-12

Excess Farm Loss Worksheet 2

21. Enter your combined net gain/loss from the sale of farming business property reported on your 2008 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Enter the amount from your 2007 Schedule(s) F (Form 1040), line 36 . . . . 22.

23. Enter the amount from your 2007 Schedule(s) C (Form 1040), line 31 . . . . 23.

24. Enter your combined net gain/loss from the sale of farming business property reported on your 2007 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.

25. Enter the amount from your 2006 Schedule(s) F (Form 1040), line 36 . . . . 25.

26. Enter the amount from your 2006 Schedule(s) C (Form 1040), line 31 . . . . 26.

27. Enter your combined net gain/loss from the sale of farming business property reported on your 2006 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.

28. Combine lines 13 through 27. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.

29. Enter the greater of line 28 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . 29.

30. Add lines 12 and 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.

31. Excess farm loss. Subtract line 3 from line 30. If zero or less, you have an excess farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses . . . . . . . . . . . . 31.

F-13

Excess Farm Loss Worksheet 3—Schedule F (Form 1040) farming business(es) and Schedule E (Form 1040) partnership or S corporation income or loss from farming business(es) Keep for Your Records

CAUTION: In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farming business(es).

1. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 33 . . . . . 1.

2. Enter the amount from your 2011 Schedule(s) E (Form 1040), line 31 . . . . . 2.

3. Add lines 1 and 2. Is this amount less than $300,000 ($150,000 if married filing separately)? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Subtract $300,000 ($150,000 if married filing separately) from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 9 . . . . . . 5.

6. Enter the amount from your 2011 Schedule(s) E (Form 1040), line 30 . . . . . 6.

7. Combine line 5 and line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8. Is line 7 greater than or equal to line 4? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 9.

9. Enter your net gain/loss from the sale of farming business property reported on Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Enter your net gain/loss from the sale of farming business property reported on Schedule D (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Combine line 9 and line 10. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Add line 7 and line 11. Is this greater than or equal to line 4? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Enter the amount from your 2010 Schedule(s) F (Form 1040), line 36 . . . . . 13.

14. Enter the amount from your 2010 Schedule(s) E (Form 1040), line 32 . . . . . 14.

15. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.

16. Enter the amount from your 2009 Schedule(s) F (Form 1040), line 36 . . . . . 16.

17. Enter the amount from your 2009 Schedule(s) E (Form 1040), line 32 . . . . . 17.

18. Enter your combined net gain/loss from the sale of farming business property reported on your 2009 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Enter the amount from your 2008 Schedule(s) F (Form 1040), line 36 . . . . . 19.

20. Enter the amount from your 2008 Schedule(s) E (Form 1040), line 32 . . . . . 20.

F-14

Excess Farm Loss Worksheet 3

21. Enter your combined net gain/loss from the sale of farming business property reported on your 2008 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Enter the amount from your 2007 Schedule(s) F (Form 1040), line 36 . . . . . 22.

23. Enter the amount from your 2007 Schedule(s) E (Form 1040), line 32 . . . . . 23.

24. Enter your combined net gain/loss from the sale of farming business property reported on your 2007 Form 4797 and Schedule D (Form (1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.

25. Enter the amount from your 2006 Schedule(s) F (Form 1040), line 36 . . . . . 25.

26. Enter the amount from your 2006 Schedule(s) E (Form 1040), line 32 . . . . . 26.

27. Enter your combined net gain/loss from the sale of farming business property reported on your 2006 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.

28. Combine lines 13 through 27. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.

29. Enter the greater of line 28 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . 29.

30. Add lines 12 and 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.

31. Excess farm loss. Subtract line 3 from line 30. If zero or less, you have an excess farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses . . . . . . . . . . . . 31.

F-15

Excess Farm Loss Worksheet 4—Schedule F (Form 1040) farming business(es), Schedule C (Form 1040) activity of processing a farm commodity, Schedule E (Form 1040) partnership or S corporation income or loss from farming business(es), and Form 4835 rental income or loss Keep for Your Records

CAUTION: In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farming business(es).

1. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 33 . . . . 1.

2. Enter the total amount from your 2011 Schedule(s) C (Form 1040), line 28 and line 30, for activity of processing a farm commodity . . . . . . . . . . . . 2.

3. Enter the amount from your 2011 Schedule(s) E (Form 1040), line 31, for interest in a partnership or S corporation involved in farming businesses . . 3.

4. Enter the amount from your 2011 Form 4835, line 31 . . . . . . . . . . . . . . 4.

5. Add lines 1, 2, 3, and 4. Is this amount less than $300,000 ($150,000 if married filing separately)? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 6 . . . . . . . . . . . . . . . . . . . . . . . . 5.

6. Subtract $300,000 ($150,000 if married filing separately) from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7. Enter the amount from your 2011 Schedule(s) F (Form 1040), line 9 . . . . . 7.

8. Enter the amount from your 2011 Schedule(s) C (Form 1040), line 7 . . . . 8.

9. Enter the amount from your 2011 Schedule(s) E (Form 1040), line 30 . . . . 9.

10. Enter the amount from your 2011 Form 4835, line 7 . . . . . . . . . . . . . . . 10.

11. Combine lines 7, 8, 9, and 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Is line 11 greater than or equal to line 6? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 13.

13. Enter your net gain/loss from the sale of farming business property reported on Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Enter your net gain/loss from the sale of farming business property reported on Schedule D (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

15. Combine line 13 and line 14. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.

16. Add lines 11 and 15. Is this greater than or equal to line 6? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.

TIP: Lines 17 through 43 help you calculate the threshold amount discussed in the instructions. The threshold amount is the greater of $300,000 ($150,000 if married filing separately) or your total net profit or loss from farming businesses for the last five years (2006-2010), including for each of those years any net gain or loss from the sale of property used in your farming businesses.

17. Enter the amount from your 2010 Schedule(s) F (Form 1040), line 36 . . . . 17.

18. Enter the amount from your 2010 Schedule(s) C (Form 1040), line 31 . . . . 18.

19. Enter the amount from your 2010 Schedule(s) E (Form 1040), line 32 . . . . 19.

20. Enter the amount from your 2010 Form 4835, line 32 . . . . . . . . . . . . . . 20.

21. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Enter the amount from your 2009 Schedule(s) F (Form 1040), line 36 . . . . 22.

23. Enter the amount from your 2009 Schedule(s) C (Form 1040), line 31 . . . . 23.

24. Enter the amount from your 2009 Schedule(s) E (Form 1040), line 32 . . . . 24.

25. Enter the amount from your 2009 Form 4835, line 32 . . . . . . . . . . . . . . 25.

26. Enter your combined net gain/loss from the sale of farming business property reported on your 2009 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.

27. Enter the amount from your 2008 Schedule(s) F (Form 1040), line 36 . . . . 27.

28. Enter the amount from your 2008 Schedule(s) C (Form 1040), line 31 . . . . 28.

(Continued on next page)

F-16

Excess Farm Loss Worksheet 4

29. Enter the amount from your 2008 Schedule(s) E (Form 1040), line 32 . . . . 29.

30. Enter the amount from your 2008 Form 4835, line 32 . . . . . . . . . . . . . . . 30.

31. Enter your combined net gain/loss from the sale of farming business property reported on your 2008 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.

32. Enter the amount from your 2007 Schedule(s) F (Form 1040), line 36 . . . . 32.

33. Enter the amount from your 2007 Schedule(s) C (Form 1040), line 31 . . . . 33.

34. Enter the amount from your 2007 Schedule(s) E (Form 1040), line 32 . . . . 34.

35. Enter the amount from your 2007 Form 4835, line 32 . . . . . . . . . . . . . . . 35.

36. Enter your combined net gain/loss from the sale of farming business property reported on your 2007 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.

37. Enter the amount from your 2006 Schedule(s) F (Form 1040), line 36 . . . . 37.

38. Enter the amount from your 2006 Schedule(s) C (Form 1040), line 31 . . . . 38.

39. Enter the amount from your 2006 Schedule(s) E (Form 1040), line 32 . . . . 39.

40. Enter the amount from your 2006 Form 4835, line 32 . . . . . . . . . . . . . . . 40.

41. Enter your combined net gain/loss from the sale of farming business property reported on your 2006 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.

42. Combine lines 17 through 41. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.

43. Enter the greater of line 42 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . 43.

44. Add lines 16 and 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.

45. Excess farm loss. Subtract line 5 from line 44. If zero or less, you have an excess farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses . . . . . . . . . . . . 45.

F-17

Excess Farm Loss Worksheet 5—Form 4835 for farm rental income or loss from farming business Keep for Your Records

CAUTION: In determining if you have an excess farm loss, do not take into account any deductions for losses arising by reason of fire, storm, or other casualty, or by reason of disease or drought, involving your farming business.

1. Enter the amount from your 2011 Form 4835, line 31. Is this amount less than $300,000 ($150,000 if married filing separately)? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 2 . . . 1.

2. Subtract $300,000 ($150,000 if married filing separately) from line 1 . . . . 2.

3. Enter the amount from your 2011 Form 4835, line 7 . . . . . . . . . . . . . . . 3.

4. Is line 3 greater than or equal to line 2? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 5.

5. Enter your net gain/loss from the sale of farming business property reported on Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6. Enter your net gain/loss from the sale of farming business property reported on Schedule D (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7. Combine line 5 and line 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8. Add line 3 and line 7. Is this greater than or equal to line 2? If yes, stop here. You do not have an excess farm loss in 2011. If no, continue to line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.

9. Enter the amount from your 2010 Form 4835, line 32 . . . . . . . . . . . . . . 9.

10. Enter your combined net gain/loss from the sale of farming business property reported on your 2010 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the amount from your 2009 Form 4835, line 32 . . . . . . . . . . . . . . 11.

12. Enter your combined net gain/loss from the sale of farming business property reported on your 2009 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Enter the amount from your 2008 Form 4835, line 32 . . . . . . . . . . . . . . 13.

14. Enter your combined net gain/loss from the sale of farming business property reported on your 2008 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.

15. Enter the amount from your 2007 Form 4835, line 32 . . . . . . . . . . . . . . 15.

16. Enter your combined net gain/loss from the sale of farming business property reported on your 2007 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.

17. Enter the amount from your 2006 Form 4835, line 32 . . . . . . . . . . . . . . 17.

18. Enter your combined net gain/loss from the sale of farming business property reported on your 2006 Form 4797 and Schedule D (Form 1040). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

19. Combine lines 9 through 18. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.

20. Enter the greater of line 19 or $300,000 ($150,000 if married filing separately) . . . . . . . . . . . . . . . . . . . . . . 20.

21. Add lines 8 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.

22. Excess farm loss. Subtract line 1 from line 21. If zero or less, you have an excess farm loss that reduces the amount of loss you can deduct this year. If you have more than one farming business with an overall loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses . . . . . . . . . . . . 22.

F-18

Internal Revenue Service

2011 Instructions for Schedule J Use Schedule J (Form 1040) to elect to figure your 2011 income tax by averaging, over the previous 3 years (base years), all or part of your 2011 taxable income from your trade orIncome business of farming or fishing. This election may give you a lower tax if your 2011 income from farming or fishing is high and your taxable income for one or more of the 3 prior yearsAveraging for was low.

In order to qualify for this election, you are not required to have been in the business of farming or fishing during any of the base years.Farmers and

You may elect to average farming or fishing income even if your filing status was not the same in the election year and the base years.Fishermen

This election does not apply when figuring your alternative minimum tax on Form 6251. Also, you do not have to recompute, because of this election, the tax liability of any minor child who was required to use your tax rates in the prior years.

5. Leasing land to a tenant engaged in a only if the compensation is based on a shareWhat’s New of the catch (or a share of the proceeds fromfarming business, but only if the lease pay-

The IRS has created a page on IRS.gov for the sale of the catch).ments are (a) based on a share of the information about Form 1040 and its in- tenant’s production (not a fixed amount),structions, at www.irs.gov/form1040. In- and (b) determined under a written agree-formation about any future developments The word fish means finfish, mollusks,ment entered into before the tenant beginsaffecting Form 1040 (such as legislation crustaceans, and all other forms of marinesignificant activities on the land.enacted after we release it) will be posted animal and plant life other than marine on that page. mammals and birds.

A farming business does not include: A fishing business does not include any• Contract harvesting of an agricultural scientific research activity conducted by aGeneral Instructions or horticultural commodity grown or raised scientific research vessel.by someone else, or

Prior Year Tax Returns • Merely buying or reselling plants or Settlement from Exxon Valdez litiga- animals grown or raised by someone else.You may need copies of your original or tion. You will be treated as engaged in a

amended income tax returns for 2008, fishing business with respect to any quali- 2009, and 2010 to figure your tax on fied settlement income you received if ei- Schedule J. ther of the following applies.

If you need copies of your tax returns, 1. You were a plaintiff in the civil actionFishing business. A fishing business is the use Form 4506. There is a $57 fee (subject In re Exxon Valdez, No. 89-095-CVtrade or business of fishing in which the to change) for each return requested. If (HRH) (Consolidated) (D. Alaska); orfish harvested, either in whole or in part, your main home, principal place of busi- are intended to enter commerce or enter 2. All of the following apply. ness, or tax records are located in a feder- commerce through sale, barter, or trade.

a. You were a beneficiary of a plaintiffally declared disaster area, this fee will be This includes: described in (1) above,waived. If you want a free transcript of

1. The catching, taking, or harvesting ofyour tax return or account, use Form b. You acquired the right to receive fish;4506-T. See your Form 1040 instructions qualified settlement income from that

2. The attempted catching, taking, orto find out how to get these forms. plaintiff, and harvesting of fish; c. You were the spouse or an immediateKeep a copy of your 2011 income tax

3. Any other activity which can reasona- relative of that plaintiff.return to use for income averaging in 2012, bly be expected to result in the catching,2013, or 2014. taking, or harvesting of fish;

Qualified settlement income is any tax-Definitions 4. Any operations at sea in support of, or able interest and punitive damage awardsin preparation for, any activity described inFarming business. A farming business is you received (whether as lump sums or pe-(1) through (3) above;the trade or business of cultivating land or riodic payments) in connection with the

5. Leasing a fishing vessel, but only ifraising or harvesting any agricultural or Exxon Valdez civil action described above. the lease payments are (a) based on a sharehorticultural commodity. This includes: Qualified settlement income includes all of the catch (or a share of the proceeds from such awards, whether received before or af-1. Operating a nursery or sod farm; the sale of the catch) from the lessee’s use ter the judgment and whether related to a

2. Raising or harvesting of trees bearing of the vessel in a fishing business (not a settlement or a judgment. fruits, nuts, or other crops; fixed payment), and (b) determined under a

written lease entered into before the lessee3. Raising ornamental trees (but not ev- Additional Informationbegins any significant fishing activities re-ergreen trees that are more than 6 years old

sulting in the catch; andwhen severed from the roots); See Pub. 225 and Regulations section 6. Compensation as a crew member on a4. Raising, shearing, feeding, caring for, 1.1301-1 for more information.

vessel engaged in a fishing business, buttraining, and managing animals; and

J-1 Cat. No. 25514JNov 02, 2011

• Schedule F; • 2010 (that is, you entered the amount • Form 4797; from the 2010 Schedule J, line 23, on lineSpecific Instructions

44 of your 2010 Form 1040, on line 42 of• Form 4835; your 2010 Form 1040NR, or on Form• Form 8903, domestic production ac- 1040X for 2010), enter on line 5 theLine 2a tivities deduction, but only to the extent amount from your 2010 Schedule J, line 11.that deduction is attributable to your farm-Elected Farm Income • 2009 but not 2010, enter on line 5 theing or fishing business; and amount from your 2009 Schedule J, line 15.To figure your elected farm income, first • Form 8949.

figure your taxable income from farming or • 2008 but not 2009 or 2010, enter on Your elected farm income is the amountfishing. This includes all income, gains, line 5 the amount from your 2008 Schedule

of your taxable income from farming orlosses, and deductions attributable to your J, line 3. fishing that you elect to include on line 2a.farming or fishing business. If you conduct

If you figured your tax for 2008, 2009,However, you do not have to include all ofboth farming and fishing businesses, you and 2010 without using Schedule J, enteryour taxable income from farming or fish-must figure your elected farm income by on line 5 the taxable income from youring on line 2a. It may be to your advantagecombining income, gains, losses, and de- 2008 tax return (or as previously adjustedto include less than the entire amount, de-ductions attributable to your farming and by the IRS, or corrected on an amended re-pending on how the amount you include onfishing businesses. turn). But if that amount is zero or less,line 2a affects your tax bracket for the cur-

Elected farm income also includes any complete the 2008 Taxable Income Work-rent and prior 3 tax years. gain or loss from the sale or other disposi- sheet to figure the amount to enter on line

If you received certain subsidies intion of property regularly used in your 5. 2011, your elected farm income cannot in-farming or fishing business for a substantial If you did not file a tax return for 2008,clude excess farm losses. See the Instruc-period of time. However, if such gain or use the amount you would have reported astions for Schedule F (Form 1040).loss is realized after cessation of the farm- your taxable income had you been requireding or fishing business, the gain or loss is Your elected farm income cannot ex- to file a tax return. Be sure to keep all yourtreated as attributable to a farming or fish- ceed your taxable income. records for 2008 for at least 3 years aftering business only if the property is sold April 17, 2012 (or the date you file yourwithin a reasonable time after cessation of 2011 tax return, if later).the farming or fishing business. A sale or Lines 2b and 2cother disposition within 1 year of the cessa- Instructions for 2008 Taxable

tion is considered to be within a reasonable Income WorksheetComplete lines 2b and 2c if the amount of time. your elected farm income on line 2a in- Line 2. Any net capital loss deduction on

cludes net capital gain. Net capital gain isElected farm income does not include your 2008 Schedule D, line 21, is not al- the excess, if any, of net long-term capitalincome, gain, or loss from the sale or other lowed for income averaging purposes to the gain over net short-term capital loss.disposition of land or from the sale of de- extent it did not reduce your capital loss

velopment rights, grazing rights, and other carryover to 2009. This could happen if theLine 2b. Enter on line 2b the portion of similar rights. taxable income before subtracting exemp-your elected farm income on line 2a treated

tions—shown on your 2008 Form 1040,as a net capital gain. The amount you enter You should find your income, gains, line 41, or your 2008 Form 1040NR, lineon line 2b cannot exceed the smaller oflosses, and deductions from farming or 38 (or as previously adjusted)—was lessyour total net capital gain or the net capitalfishing reported on different tax forms, than zero. Enter on line 2 the amount bygain attributable to your farming or fishingsuch as: which your 2008 capital loss carryover tobusiness.• 2011 Form 1040, line 7, or Form 2009 (the sum of your short- and long-term 1040NR, line 8, income from wages and Line 2c. Enter on line 2c the smaller of capital loss carryovers) exceeds the excess other compensation you received (a) as a line 2b or the unrecaptured section 1250 of the loss on your 2008 Schedule D, line shareholder in an S corporation engaged in gain attributable to your farming or fishing 16, over the loss on your 2008 Schedule D, a farming or fishing business or (b) as a business, if any. line 21. If you had any Net Operating Loss crew member on a vessel engaged in a fish- (NOL) carrybacks to 2008, be sure you ing business (but see Fishing business, ear- refigured your 2008 capital loss carryover lier); to 2009.Line 4• 2011 Form 1040, line 21, or Form

Line 3. If you had an NOL for 2008, enterFigure the tax on the amount on line 3 us-1040NR, line 21, income from Exxon the amount of that NOL from line 25 of theing:Valdez litigation; 2008 Form 1045, Schedule A, you filed• The 2011 Tax Table, Tax Computa-• 2011 Form 1040, line 27, or Form with Form 1045 or Form 1040X. If you did

tion Worksheet, or Qualified Dividends1040NR, line 27, deductible part of not have an NOL for 2008, enter the por- and Capital Gain Tax Worksheet from theself-employment tax, but only to the extent tion, if any, of the NOL carryovers and car- 2011 Instructions for Form 1040 or Formthat deduction is attributable to your farm- rybacks to 2008 that were not used in 2008 1040NR;ing or fishing business; and were carried to years after 2008.

• The 2011 Foreign Earned Income Tax• 2011 Form 1040, line 43, or Form Example. John Farmington, who is single,Worksheet from the 2011 Instructions for1040NR, line 41, CCF reduction, except to did not use income averaging for 2008,Form 1040; orthe extent that any earnings (without regard 2009, or 2010. For 2011, John has $18,000to the carryback of any net operating or net • The Schedule D Tax Worksheet in the of elected farm income on Schedule J, linecapital loss) from the operation of agree- 2011 Instructions for Schedule D. 2a. The taxable income before subtractingment vessels in the fisheries of the United

Enter the tax on line 4. exemptions on his 2008 Form 1040, lineStates or in the foreign or domestic com- 41, is $4,350. A deduction for exemptionsmerce of the United States are not attributa- of $3,500 is shown on line 42, and line 43,ble to your fishing business; taxable income, is $850. However, John• Schedule C or C-EZ; Line 5 had a $21,200 NOL for 2009, $9,000 of

• Schedule D; If you used Schedule J to figure your tax which was remaining to carry to 2008 after • Schedule E, Part II; for: the NOL was carried back to 2007. To

J-2

2008 Taxable Income Worksheet—Line 5 Keep for Your Records

complete line 1 of the 2008 Taxable In- John carried back the 2009 NOL ($9,000 of ryback. As a result, only $1,650 was avail- come Worksheet, John combines the which was carried to 2008), he refigured able to carry to 2010 and later years, as $9,000 NOL deduction with the $850 from his 2008 capital loss carryover to 2009 as shown on line 10 of his 2009 Form 1045, his 2008 Form 1040, line 43. The result is a $7,000. John adds the $3,000 from Sched- Schedule B. John enters the $1,650 on line negative $8,150, John’s 2008 taxable in- ule D, line 21, and the $7,000 carryover. He 3 of the worksheet, and $4,650 ($1,650 plus come, which he enters as a positive amount subtracts from the $10,000 result the the $3,000 line 2 amount) on line 4. He then on line 1 of the 2008 Taxable Income $7,000 loss on his Schedule D, line 16, and subtracts the $4,650 from the $8,150 onWorksheet. enters $3,000 on line 2 of the worksheet. line 1 and enters the result, $3,500, on line

When John filed his 2008 tax return, he 5 of the worksheet. He enters a negativeJohn had $850 of taxable income inhad a $3,000 net capital loss deduction on $3,500 on Schedule J, line 5. He combines2008 that reduced the 2009 NOL car-Schedule D, line 21 (which was also en- that amount with the $6,000 on Schedule J,ryback. The $3,500 exemption deductiontered on Form 1040, line 13), a $7,000 loss line 6, and enters $2,500 on Schedule J, lineand $3,000 net capital loss deduction alsoon Schedule D, line 16, and a $4,000 capi- 7.reduced the amount of the 2009 NOL car-tal loss carryover to 2009. However, when

Complete this worksheet if you did not use Schedule J to figure your tax for 2009 and 2010 and your 2008 taxable income was zero or less. See the instructions above before completing this worksheet for line 5.

1. Figure the taxable income from your 2008 tax return (or as previously adjusted) without limiting it to zero. If you had an NOL for 2008, do not include any NOL carryovers or carrybacks to 2008. Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. If there is a loss on your 2008 Schedule D, line 21, add that loss (as a positive amount) and your 2008 capital loss carryover to 2009. Subtract from that sum the amount of the loss on your 2008 Schedule D, line 16, and enter the result . . . . . . . 2.

3. If you had an NOL for 2008, enter it as a positive amount. Otherwise, enter as a positive amount the portion, if any, of the NOL carryovers and carrybacks to 2008 that were not used in 2008 and were carried to years after 2008 . . . . . . . . . . . . . . 3.

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . . 5.

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when figuring the tax on lines 33 and 35 of 2008 Schedule D Tax Worksheet to figure Line 8 the Schedule D Tax Worksheet), or the tax on the amount on line 3 of that

worksheet.• The 2008 Foreign Earned Income TaxIf line 7 is zero, enter -0- on line 8. Other- Worksheet, later.wise, figure the tax on the amount on line 7

When completing the Schedule D Taxusing: Worksheet, you must allocate 1/3 of theIf your elected farm income includes net• The 2008 Tax Rate Schedules below, amount on line 2b (and 1/3 of the amountcapital gain, you must use the 2008 Sched-

• The 2008 Qualified Dividends and on line 2c, if any) to 2008. If for 2008 youule D Tax Worksheet to figure the tax on Capital Gain Tax Worksheet, later, had a capital loss that resulted in a capitalthe amount on line 7. However, if you filed

loss carryover to 2009, do not reduce the• The 2008 Schedule D Tax Worksheet Form 2555 or 2555-EZ for 2008, you must elected farm income allocated to 2008 byin the 2008 Schedule D instructions (but first complete the 2008 Foreign Earned In- any part of the carryover.use the 2008 Tax Rate Schedules below come Tax Worksheet, and then use the

2008 Tax Rate Schedules—Line 8

Schedule Y-2—Use if your 2008 filing status was Married filing Schedule X—Use if your 2008 filing status was Single or you checked separately or you checked filing status box 3, 4, or 5 on

filing status box 1 or 2 on Form 1040NR Form 1040NR

If Schedule J, Enter on of the If Schedule J, Enter on of the line 7, is: But not Schedule J, amount line 7, is: But not Schedule J, amount Over— over— line 8 over— Over— over— line 8 over—

$0 $8,025 ........... 10% $0 $0 $8,025 ........... 10% $0 8,025 32,550 $802.50 + 15% 8,025 8,025 32,550 $802.50 + 15% 8,025

32,550 78,850 4,481.25 + 25% 32,550 32,550 65,725 4,481.25 + 25% 32,550 78,850 164,550 16,056.25 + 28% 78,850 65,725 100,150 12,775.00 + 28% 65,725

164,550 357,700 40,052.25 + 33% 164,550 100,150 178,850 22,414.00 + 33% 100,150 357,700 ............. 103,791.75 + 35% 357,700 178,850 ............. 48,385.00 + 35% 178,850

Schedule Y-1—Use if your 2008 filing status was Married filing jointly or Qualifying widow(er) or you checked filing status box 6 on Form 1040NR Schedule Z—Use if your 2008 filing status was Head of household

If Schedule J, Enter on of the If Schedule J, Enter on of the line 7, is: But not Schedule J, amount line 7, is: But not Schedule J, amount Over— over— line 8 over— Over— over— line 8 over—

$0 $16,050 ........... 10% $0 $0 $11,450 ........... 10% $0 16,050 65,100 $1,605.00 + 15% 16,050 11,450 43,650 $1,145.00 + 15% 11,450 65,100 131,450 8,962.50 + 25% 65,100 43,650 112,650 5,975.00 + 25% 43,650

131,450 200,300 25,550.00 + 28% 131,450 112,650 182,400 23,225.00 + 28% 112,650 200,300 357,700 44,828.00 + 33% 200,300 182,400 357,700 42,755.00 + 33% 182,400 357,700 ............ 96,770.00 + 35% 357,700 357,700 ............. 100,604.00 + 35% 357,700

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2008 Qualified Dividends and Capital Gain Tax Worksheet—Line 8 Keep for Your Records

Use this worksheet only if both of the following apply. • Your elected farm income on your 2011 Schedule J, line 2a, does not include any net capital gain. • You (a) entered qualified dividends on your 2008 Form 1040, line 9b (or your 2008 Form 1040A, line 9b, or 2008 Form

1040NR, line 10b); (b) entered capital gain distributions directly on your 2008 Form 1040, line 13 (or your 2008 Form 1040A, line 10, or 2008 Form 1040NR, line 14) and were not required to file Schedule D; or (c) filed Schedule D in 2008 and you answered “Yes” on lines 17 and 20 of that Schedule D.

1. Amount from your 2011 Schedule J, line 7. If for 2008 you filed Form 2555 or 2555-EZ, enter the amount from line 3 of the 2008 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Amount from your 2008 Form 1040, line 9b* (or your 2008 Form 1040A, line 9b, or 2008 Form 1040NR, line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Did you file Schedule D in 2008?* Yes. Enter the smaller of line 15 or 16 of your

2008 Schedule D, but do not enter less than -0- } 3. No. Enter the amount from your 2008 Form 1040,line 13 (or your 2008 Form 1040A, line 10, or 2008 Form 1040NR, line 14)

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Amount, if any, from your 2008 Form 4952, line 4g . . . . 5. 6. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 6. 7. Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 7. 8. Enter the smaller of:

• The amount on line 1, or • $32,550 if single or married filing separately or if you

checked filing status box 1, 2, 3, 4, or 5 on Form 1040NR;} . . . . . . . . . . . 8.$65,100 if married filing jointly or qualifying widow(er)or if you checked filing status box 6 on Form 1040NR; $43,650 if head of household.

9. Is the amount on line 7 equal to or more than the amount on line 8? Yes. Skip lines 9 and 10; go to line 11 and check the ‘‘No’’ box. No. Enter the amount from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Are the amounts on lines 6 and 10 the same?

Yes. Skip lines 11 through 14; go to line 15. No. Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Enter the amount from line 10 (if line 10 is blank, enter -0-) . . . . . . . . . . . . . . . 12. 13. Subtract line 12 from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Multiply line 13 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 15. Figure the tax on the amount on line 7. Use the 2008 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . 15. 16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 17. Figure the tax on the amount on line 1. Use the 2008 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . 17. 18. Tax. Enter the smaller of line 16 or line 17 here and on your 2011 Schedule J, line 8. If for 2008

you filed Form 2555 or 2555-EZ, do not enter this amount on Schedule J, line 8. Instead, enter it on line 4 of the 2008 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

*If for 2008 you filed Form 2555 or 2555-EZ, see the footnote in the 2008 Foreign Earned Income Tax Worksheet before completing this line.

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2008 Foreign Earned Income Tax Worksheet—Line 8 Keep for Your Records

Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2008 Form 1040 using Form 2555 or 2555-EZ. However, if Schedule J, line 7, is zero or less do not complete this worksheet.

1. Enter the amount from your 2011 Schedule J, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the amount from your (and your spouse’s, if filing jointly) 2008 Form 2555, lines 45 and 50, or Form

2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Tax on the amount on line 3. Use the 2008 Tax Rate Schedules, the 2008 Qualified Dividends and Capital

Gain Tax Worksheet,* or the 2008 Schedule D Tax Worksheet in the 2008 Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Tax on the amount on line 2. Use the 2008 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on your 2011

Schedule J, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

*Enter the amount from line 3 above on line 1 of the 2008 Qualified Dividends and Capital Gain Tax Worksheet or the 2008 Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess, subtract the amount from your 2011 Schedule J, line 7, from line 6 of your 2008 Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2008 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.

If you did not have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions. Then complete lines 5 and 6 above.

If you had a capital gain excess, complete a second 2008 Qualified Dividends and Capital Gain Tax Worksheet or 2008 Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2008 Foreign Earned Income Tax Worksheet above.

1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2008 Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your 2008 Schedule D Tax Worksheet by your capital gain excess.

2. Reduce (but not below zero) the amount you would otherwise enter on your 2008 Form 1040, line 9b, by any of your capital gain excess not used in (1) above.

3. Reduce (but not below zero) the amount on your 2008 Schedule D (Form 1040), line 18, by your capital gain excess.

4. Include your capital gain excess as a loss on line 16 of your 2008 Unrecaptured Section 1250 Gain Worksheet in the 2008 Instructions for Schedule D (Form 1040).

J-6

2009 Taxable Income Worksheet—Line 9 Keep for Your Records

taxable income before subtracting exemp- When John filed his 2009 tax return, he Line 9 tions—shown on your 2009 Form 1040, had a $3,000 net capital loss deduction on

line 41, or your 2009 Form 1040NR, line Schedule D, line 21 (which was also en-If you used Schedule J to figure your tax 38 (or as previously adjusted)—was less tered on Form 1040, line 13), and a $7,000for: than zero. Enter on line 2 the amount by loss on Schedule D, line 16 (as adjusted).• 2010 (that is, you entered the amount which your 2009 capital loss carryover to He also had a $7,000 capital loss carryoverfrom the 2010 Schedule J, line 23, on line 2010 (the sum of your short- and long-term to 2010. John adds the $3,000 from Sched-44 of your 2010 Form 1040, on line 42 of capital loss carryovers) exceeds the excess ule D, line 21, and the $7,000 carryover. He2010 Form 1040NR, or on Form 1040X for of the loss on your 2009 Schedule D, line subtracts from the $10,000 result the2010), enter on line 9 the amount from your 16, over the loss on your 2009 Schedule D, $7,000 loss on his Schedule D, line 16, and2010 Schedule J, line 15. line 21. If you had any NOL carrybacks to enters $3,000 on line 2 of the worksheet.• 2009 but not 2010, enter on line 9 the 2009, be sure you refigured your 2009 capi-

amount from your 2009 Schedule J, line 3. tal loss carryover to 2010. John enters $21,200 on line 3 of the If you figured your tax for both 2009 worksheet, the 2009 NOL from his 2009

and 2010 without using Schedule J, enter Line 3. If you had an NOL for 2009, enter Form 1045, Schedule A, line 25. Of the on line 9 the taxable income from your the amount of that NOL from line 25 of the $33,550 negative taxable income, the2009 tax return (or as previously adjusted 2009 Form 1045, Schedule A, you filed $3,650 deduction for exemptions, theby the IRS or corrected on an amended re- with Form 1045 or Form 1040X. If you did $3,000 capital loss deduction, and histurn). But if that amount is zero or less, not have an NOL for 2009, enter the por- $5,700 standard deduction were not al-complete the worksheet below to figure the tion, if any, of the NOL carryovers and car- lowed in figuring the NOL. John had aamount to enter on line 9. rybacks to 2009 that were not used in 2009 $21,200 loss on his 2009 Schedule F, theand were carried to years after 2009. If you did not file a tax return for 2009, only other item on his 2009 tax return. use the amount you would have reported as

Example. John Farmington did not use in-your taxable income had you been required John enters $24,200 (the $3,000 line 2 come averaging for 2008, 2009, or 2010.to file a tax return. Be sure to keep all your amount plus the $21,200 line 3 amount) on The taxable income before subtracting ex-records for 2009 until at least 3 years after line 4 and $9,350 (the $33,550 line 1emptions on his 2009 Form 1040, line 41,April 17, 2012 (or the date you file your amount minus the $24,200 line 4 amount)is a negative $29,900. A deduction for ex-2011 tax return, if later). on line 5. He enters $9,350 as a negativeemptions of $3,650 is shown on line 42,Instructions for 2009 Taxable amount on Schedule J, line 9. He entersand line 43, taxable income, is limited toIncome Worksheet $6,000 on Schedule J, line 10, and a nega-zero. John subtracts from the $29,900 loss

tive $3,350 on Schedule J, line 11. If hethe $3,650 deduction for exemptions. TheLine 2. Any net capital loss deduction on uses Schedule J to figure his tax for 2012,result is a negative $33,550, John’s 2009your 2009 Schedule D, line 21, is not al- he will enter the negative $3,350 amount ontaxable income, which he enters as a posi-lowed for income averaging purposes to the his 2012 Schedule J as his 2009 taxable in-tive amount on line 1 of the 2009 Taxableextent it did not reduce your capital loss come for income averaging purposes.Income Worksheet.carryover to 2010. This could happen if the

Complete this worksheet if you did not use Schedule J to figure your tax for 2010 and your 2009 taxable income was zero or less. See the instructions above before completing this worksheet.

1. Figure the taxable income from your 2009 tax return (or as previously adjusted) without limiting it to zero. If you had an NOL for 2009, do not include any NOL carryovers or carrybacks to 2009. Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. If there is a loss on your 2009 Schedule D, line 21, add that loss (as a positive amount) and your 2009 capital loss carryover to 2010. Subtract from that sum the amount of the loss on your 2009 Schedule D, line 16, and enter the result . . . . . . 2.

3. If you had an NOL for 2009, enter it as a positive amount. Otherwise, enter as a positive amount the portion, if any, of the NOL carryovers and carrybacks to 2009 that were not used in 2009 and were carried to years after 2009 . . . . . . . . . . . . . 3.

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 . . . . . . . . . . . 5.

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2009 Tax Rate Schedules—Line 12

• The 2009 Foreign Earned Income Tax When completing the Schedule D Tax Line 12 Worksheet, you must allocate 1/3 of theWorksheet, later.

amount on line 2b (and 1/3 of the amountIf line 11 is zero or less, enter -0- on line 12. on line 2c, if any) to 2009. If for 2009 youOtherwise, figure the tax on the amount on If your elected farm income includes net had a capital loss that resulted in a capitalline 11 using: capital gain, you must use the 2009 Sched- loss carryover to 2010, do not reduce the• The 2009 Tax Rate Schedules below, ule D Tax Worksheet to figure the tax on elected farm income allocated to 2009 by

the amount on line 11. However, if you• The 2009 Qualified Dividends and any part of the carryover. filed Form 2555 or 2555-EZ for 2009, youCapital Gain Tax Worksheet, later, must first complete the 2009 Foreign• The 2009 Schedule D Tax Worksheet Earned Income Tax Worksheet, and thenin the 2009 Schedule D instructions (but use the 2009 Schedule D Tax Worksheet touse the 2009 Tax Rate Schedules below figure the tax on the amount on line 3 ofwhen figuring the tax on the Schedule D that worksheet.Tax Worksheet, lines 33 and 35), or

Schedule Y-2—Use if your 2009 filing status was Married filing Schedule X—Use if your 2009 filing status was Single or you checked separately or you checked filing status box 3, 4, or 5 on

filing status box 1 or 2 on Form 1040NR Form 1040NR

If Schedule J, Enter on of the If Schedule J, Enter on of the line 11, is: But not Schedule J, amount line 11, is: But not Schedule J, amount Over— over— line 12 over— Over— over— line 12 over—

$0 $8,350 ........... 10% $0 $0 $8,350 ........... 10% $0 8,350 33,950 $835.00 + 15% 8,350 8,350 33,950 $835.00 + 15% 8,350

33,950 82,250 4,675.00 + 25% 33,950 33,950 68,525 4,675.00 + 25% 33,950 82,250 171,550 16,750.00 + 28% 82,250 68,525 104,425 13,318.75 + 28% 68,525

171,550 372,950 41,754.00 + 33% 171,550 104,425 186,475 23,370.75 + 33% 104,425 372,950 ............. 108,216.00 + 35% 372,950 186,475 ............. 50,447.25 + 35% 186,475

Schedule Y-1—Use if your 2009 filing status was Married filing jointly or Qualifying widow(er) or you checked filing status box 6 on Form 1040NR Schedule Z—Use if your 2009 filing status was Head of household

If Schedule J, Enter on of the If Schedule J, Enter on of the line 11, is: But not Schedule J, amount line 11, is: But not Schedule J, amount Over— over— line 12 over— Over— over— line 12 over—

$0 $16,700 ........... 10% $0 $0 $11,950 ........... 10% $0 16,700 67,900 $1,670.00 + 15% 16,700 11,950 45,500 $1,195.00 + 15% 11,950 67,900 137,050 9,350.00 + 25% 67,900 45,500 117,450 6,227.50 + 25% 45,500

137,050 208,850 26,637.50 + 28% 137,050 117,450 190,200 24,215.00 + 28% 117,450 208,850 372,950 46,741.50 + 33% 208,850 190,200 372,950 44,585.00 + 33% 190,200 372,950 ............ 100,894.50 + 35% 372,950 372,950 ............. 104,892.50 + 35% 372,950

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2009 Qualified Dividends and Capital Gain Tax Worksheet—Line 12 Keep for Your Records

Use this worksheet only if both of the following apply. • Your elected farm income on your 2011 Schedule J, line 2a, does not include any net capital gain. • You (a) entered qualified dividends on your 2009 Form 1040, line 9b (or your 2009 Form 1040A, line 9b, or 2009 Form

1040NR, line 10b); (b) entered capital gain distributions directly on your 2009 Form 1040, line 13 (or your 2009 Form 1040A, line 10, or 2009 Form 1040NR, line 14) and were not required to file Schedule D; or (c) filed Schedule D in 2009 and you answered “Yes” on lines 17 and 20 of that Schedule D.

1. Amount from your 2011 Schedule J, line 11. If for 2009 you filed Form 2555 or 2555-EZ, enter the amount from line 3 of the 2009 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Amount from your 2009 Form 1040, line 9b* (or your 2009 Form 1040A, line 9b, or 2009 Form 1040NR, line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Did you file Schedule D in 2009?* Yes. Enter the smaller of line 15 or 16 of your

2009 Schedule D, but do not enter less than -0- } 3. No. Enter the amount from your 2009 Form 1040, line 13 (or your 2009 Form 1040A, line 10, or 2009 Form 1040NR, line 14)

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Amount, if any, from your 2009 Form 4952, line 4g . . . 5. 6. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 6. 7. Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 7. 8. Enter the smaller of:

• The amount on line 1, or • $33,950 if single or married filing separately, or if you

checked filing status box 1, 2, 3, 4, or 5 on Form 1040NR;} . . . . . . . . . . . 8.$67,900 if married filing jointly or qualifying widow(er) or if you checked filing status box 6 on Form 1040NR; $45,500 if head of household.

9. Is the amount on line 7 equal to or more than the amount on line 8? Yes. Skip lines 9 and 10; go to line 11 and check the ‘‘No’’ box. No. Enter the amount from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.

10. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Are the amounts on lines 6 and 10 the same?

Yes. Skip lines 11 through 14; go to line 15. No. Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Enter the amount from line 10 (if line 10 is blank, enter -0-) . . . . . . . . . . . . . . . 12. 13. Subtract line 12 from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Multiply line 13 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14. 15. Figure the tax on the amount on line 7. Use the 2009 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . .15. 16. Add lines 14 and 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16. 17. Figure the tax on the amount on line 1. Use the 2009 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . .17. 18. Tax. Enter the smaller of line 16 or line 17 here and on your 2011 Schedule J, line 12. If for 2009

you filed Form 2555 or 2555-EZ, do not enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2009 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18.

*If for 2009 you filed Form 2555 or 2555-EZ, see the footnote in the 2009 Foreign Earned Income Tax Worksheet before completing this line.

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2009 Foreign Earned Income Tax Worksheet—Line 12 Keep for Your Records

Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2009 Form 1040 using Form 2555 or 2555-EZ. However, if Schedule J, line 11, is zero or less do not complete this worksheet.

1. Enter the amount from your 2011 Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the amount from your (and your spouse’s, if filing jointly) 2009 Form 2555, lines 45 and 50, or Form

2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Tax on the amount on line 3. Use the 2009 Tax Rate Schedules, the 2009 Qualified Dividends and Capital

Gain Tax Worksheet,* or the 2009 Schedule D Tax Worksheet in the 2009 Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Tax on the amount on line 2. Use the 2009 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on your 2011

Schedule J, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

*Enter the amount from line 3 above on line 1 of the 2009 Qualified Dividends and Capital Gain Tax Worksheet or the 2009 Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess, subtract the amount from your 2011 Schedule J, line 11, from line 6 of your 2009 Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2009 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.

If you did not have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions. Then complete lines 5 and 6 above.

If you had a capital gain excess, complete a second 2009 Qualified Dividends and Capital Gain Tax Worksheet or 2009 Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2009 Foreign Earned Income Tax Worksheet above.

1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2009 Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your 2009 Schedule D Tax Worksheet by your capital gain excess.

2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2009 Qualified Dividends and Capital Gain Tax Worksheet or line 6 of your 2009 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.

3. Reduce (but not below zero) the amount on your 2009 Schedule D (Form 1040), line 18, by your capital gain excess.

4. Include your capital gain excess as a loss on line 16 of your 2009 Unrecaptured Section 1250 Gain Worksheet in the 2009 Instructions for Schedule D (Form 1040).

J-10

2010 Taxable Income Worksheet—Line 13 Keep for Your Records

tion, if any, of the NOL carryovers and car- duction to negative taxable income (figured Line 13 rybacks to 2010 that were not used in 2010 without regard to the NOL deduction) of

and were carried to years after 2010. $3,000. John enters $1,000 on line 4 andIf you used Schedule J to figure your tax for $3,650 on line 5. He enters $3,650 as a neg-2010 (that is, you entered the amount from Example. John Farmington did not use in- ative amount on Schedule J, line 13. He en-the 2010 Schedule J, line 23, on line 44 of come averaging for 2008, 2009, or 2010. ters $6,000 on Schedule J, line 14, andyour 2010 Form 1040, on line 42 of your The taxable income before subtracting ex- $2,350 on Schedule J, line 15. If he uses2010 Form 1040NR, or on Form 1040X for emptions on his 2010 Form 1040, line 41, Schedule J to figure his tax for 2012, he2010), enter on line 13 the amount from is a negative $1,000. This amount includes will enter $2,350 on his 2012 Schedule J asyour 2010 Schedule J, line 3. an NOL deduction on his 2010 Form 1040, his 2010 taxable income for income aver-line 21, of $1,650. The $1,650 is the por-If you did not use Schedule J to figure aging purposes.tion of the 2009 NOL that was remainingyour tax for 2010, enter on line 13 the tax-

from 2008 to be carried to 2010. See theable income from your 2010 tax return (or examples, earlier. A deduction for exemp-as previously adjusted by the IRS or cor- tions of $3,650 is shown on Form 1040,rected on an amended return). But if that Line 16 line 42, and line 43, taxable income, is lim-amount is zero or less, complete the work- If line 15 is zero or less, enter -0- on line 16.ited to zero. John does not have an NOL forsheet below to figure the amount to enter on Otherwise, figure the tax on the amount on2010. John subtracts from the $1,000 nega-line 13. line 15 using:tive amount on Form 1040, line 41, the If you did not file a tax return for 2010, • The 2010 Tax Rate Schedules, later,$3,650 deduction for exemptions. The re-use the amount you would have reported as sult is a negative $4,650, John’s 2010 tax- • The 2010 Qualified Dividends andyour taxable income had you been required able income, which he enters as a positive Capital Gain Tax Worksheet, later,to file a tax return. Be sure to keep all your amount on line 1 of the 2010 Taxable In- • The 2010 Schedule D Tax Worksheetrecords for 2010 until at least 3 years after come Worksheet. in the 2010 Schedule D instructions (butApril 17, 2012 (or the date you file your

use the 2010 Tax Rate Schedules when fig-When John filed his 2010 tax return, he2011 tax return, if later). uring the tax on the Schedule D Tax Work-had a $3,000 net capital loss deduction onInstructions for 2010 Taxable sheet, lines 34 and 36), orSchedule D, line 21 (which was also en-Income Worksheet tered on Form 1040, line 13), a $7,000 loss • The 2010 Foreign Earned Income Tax

on Schedule D, line 16, and a $5,000 capi-Line 2. Any net capital loss deduction on Worksheet, later. tal loss carryover to 2011 (his 2010 capitalyour 2010 Schedule D, line 21, is not al- If your elected farm income includes netloss carryover to 2011 was $5,000, notlowed for income averaging purposes to the capital gain, you must use the 2010 Sched-$4,000, because the amount on his Formextent it did not reduce your capital loss ule D Tax Worksheet to figure the tax on1040, line 41, was a negative $1,000). Johncarryover to 2011. This could happen if the the amount on line 15. However, if youadds the $3,000 from Schedule D, line 21,taxable income before subtracting exemp- filed Form 2555 or 2555-EZ for 2010, youand the $5,000 carryover. He subtractstions—shown on your 2010 Form 1040, must first complete the 2010 Foreignfrom the $8,000 result the $7,000 loss online 41, or your 2010 Form 1040NR, line Earned Income Tax Worksheet, and thenhis Schedule D, line 16, and enters $1,00039 (or as previously adjusted)—was less use the 2010 Schedule D Tax Worksheet toon line 2 of the worksheet.than zero. Enter on line 2 the amount by figure the tax on the amount on line 3 ofwhich your 2010 capital loss carryover to John enters -0- on line 3 of the work- that worksheet.2011 (the sum of your short- and long-term sheet because he does not have an NOL for

When completing the Schedule D Taxcapital loss carryovers) exceeds the excess 2010 and did not have an NOL carryover Worksheet, you must allocate 1/3 of theof the loss on your 2010 Schedule D, line from 2010 available to carry to 2011 and amount on line 2b (and 1/3 of the amount16, over the loss on your 2010 Schedule D, later years. The NOL deduction for 2010 of on line 2c, if any) to 2010. If for 2010 youline 21. $1,650 was reduced to zero because it did had a capital loss that resulted in a capitalnot exceed his modified taxable income ofLine 3. If you had an NOL for 2010, enter loss carryover to 2011, do not reduce the$3,650. Modified taxable income is figuredthe amount of that NOL from line 25 of the elected farm income allocated to 2010 byby adding back the $3,000 net capital loss2010 Form 1045, Schedule A, you filed any part of the carryover.deduction and the $3,650 exemption de-with Form 1045 or Form 1040X. If you did

not have an NOL for 2010, enter the por-

Complete this worksheet if your 2010 taxable income was zero or less. See the instructions above before completing this worksheet.

1. Figure the taxable income from your 2010 tax return (or as previously adjusted) without limiting it to zero. If you had an NOL for 2010, do not include any NOL carryovers or carrybacks to 2010. Enter the result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. If there is a loss on your 2010 Schedule D, line 21, add that loss (as a positive amount) and your 2010 capital loss carryover to 2011. Subtract from that sum the amount of the loss on your 2010 Schedule D, line 16, and enter the result . . . . . . 2.

3. If you had an NOL for 2010, enter it as a positive amount. Otherwise, enter as a positive amount the portion, if any, of the NOL carryovers and carrybacks to 2010 that were not used in 2010 and were carried to years after 2010 . . . . . . . . . . . . . 3.

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . . . . . . 5.

J-11

2010 Tax Rate Schedules—Line 16

Schedule Y-2—Use if your 2010 filing status was Married filing Schedule X—Use if your 2010 filing status was Single or you separately or you checked filing status

checked filing status box 1 or 2 on Form 1040NR box 3, 4, or 5 on Form 1040NR

If Schedule J, Enter on of the If Schedule J, Enter on of the line 15, is: But not Schedule J, amount line 15, is: But not Schedule J, amount Over— over— line 16 over— Over— over— line 16 over—

$0 $8,375 ........... 10% $0 $0 $8,375 ........... 10% $0 8,375 34,000 $837.50 + 15% 8,375 8,375 34,000 $837.50 + 15% 8,375

34,000 82,400 4,681.25 + 25% 34,000 34,000 68,650 4,681.25 + 25% 34,000 82,400 171,850 16,781.25 + 28% 82,400 68,650 104,625 13,343.75 + 28% 68,650

171,850 373,650 41,827.25 + 33% 171,850 104,625 186,825 23,416.75 + 33% 104,625 373,650 ............. 108,421.25 + 35% 373,650 186,825 ............. 50,542.75 + 35% 186,825

Schedule Y-1—Use if your 2010 filing status was Married filing jointly or Qualifying widow(er) or you checked filing status box 6 on Form 1040NR Schedule Z—Use if your 2010 filing status was Head of household

If Schedule J, Enter on of the If Schedule J, Enter on of the line 15, is: But not Schedule J, amount line 15, is: But not Schedule J, amount Over— over— line 16 over— Over— over— line 16 over—

$0 $16,750 ........... 10% $0 $0 $11,950 ........... 10% $0 16,750 68,000 $1,675.00 + 15% 16,750 11,950 45,550 $1,195.00 + 15% 11,950 68,000 137,300 9,362.50 + 25% 68,000 45,550 117,650 6,235.00 + 25% 45,550

137,300 209,250 26,687.50 + 28% 137,300 117,650 190,550 24,260.00 + 28% 117,650 209,250 373,650 46,833.50 + 33% 209,250 190,550 373,650 44,672.00 + 33% 190,550 373,650 ............ 101,085.50 + 35% 373,650 373,650 ............. 105,095.00 + 35% 373,650

J-12

2010 Qualified Dividends and Capital Gain Tax Worksheet—Line 16 Keep for Your Records

Use this worksheet only if both of the following apply. • Your elected farm income on your 2011 Schedule J, line 2a, does not include any net capital gain. • You (a) entered qualified dividends on your 2010 Form 1040, line 9b (or your 2010 Form 1040A, line 9b, or 2010 Form

1040NR, line 10b); (b) entered capital gain distributions directly on your 2010 Form 1040, line 13 (or your 2010 Form 1040A, line 10, or 2010 Form 1040NR, line 14) and were not required to file Schedule D; or (c) filed Schedule D in 2010 and you answered “Yes” on lines 17 and 20 of that Schedule D.

1. Amount from your 2011 Schedule J, line 15. If for 2010 you filed Form 2555 or 2555-EZ, enter the amount from line 3 of the 2010 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Amount from your 2010 Form 1040, line 9b* (or your 2010 Form 1040A, line 9b, or 2010 Form 1040NR, line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Did you file Schedule D in 2010?* Yes. Enter the smaller of line 15 or 16 of your

2010 Schedule D, but do not enter less than -0- } 3. No. Enter the amount from your 2010 Form 1040, line 13 (or your 2010 Form 1040A, line 10, or 2010 Form 1040NR, line 14)

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Amount, if any, from your 2010 Form 4952, line 4g . . . 5. 6. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 6. 7. Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 7. 8. Enter one of the following three amounts depending on your

filing status: • $34,000 if single or married filing separately, or if you

checked filing status box 1, 2, 3, 4, or 5 on Form 1040NR;} . . . . . . . . . . . 8.• $68,000 if married filing jointly or qualifying widow(er)or if you checked filing status box 6 on Form 1040NR; • $45,550 if head of household.

9. Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 10. Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . 11. 12. Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. 13. Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. 14. Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 15. Multiply line 14 by 15% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 16. Figure the tax on the amount on line 7. Use the 2010 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . 16. 17. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. 18. Figure the tax on the amount on line 1. Use the 2010 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . 18. 19. Tax. Enter the smaller of line 17 or line 18 here and on your 2011 Schedule J line 16. If for 2010

you filed Form 2555 or 2555–EZ, do not enter this amount on Schedule J, line 16. Instead, enter it on line 4 of the 2010 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.

*If for 2010 you filed Form 2555 or 2555-EZ, see the footnote in the 2010 Foreign Earned Income Tax Worksheet before completing this line.

J-13

2010 Foreign Earned Income Tax Worksheet—Line 16 Keep for Your Records

Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2010 Form 1040 using Form 2555 or 2555-EZ. However, if Schedule J, line 15, is zero or less do not complete this worksheet.

1. Enter the amount from your 2011 Schedule J, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the amount from your (and your spouse’s, if filing jointly) 2010 Form 2555, lines 45 and 50, or Form

2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Tax on the amount on line 3. Use the 2010 Tax Rate Schedules, the 2010 Qualified Dividends and Capital

Gain Tax Worksheet,* or the 2010 Schedule D Tax Worksheet in the 2010 Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Tax on the amount on line 2. Use the 2010 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on your 2011

Schedule J, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

*Enter the amount from line 3 above on line 1 of the 2010 Qualified Dividends and Capital Gain Tax Worksheet or the 2010 Schedule D Tax Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess, subtract the amount from your 2011 Schedule J, line 15, from line 6 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your 2010 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.

If you did not have a capital gain excess, complete the rest of either of those worksheets according to the worksheet’s instructions. Then complete lines 5 and 6 above.

If you had a capital gain excess, complete a second 2010 Qualified Dividends and Capital Gain Tax Worksheet or 2010 Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above. These modifications are to be made only for purposes of filling out the 2010 Foreign Earned Income Tax Worksheet above.

1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your 2010 Schedule D Tax Worksheet by your capital gain excess.

2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2010 Qualified Dividends and Capital Gain Tax Worksheet or line 6 of your 2010 Schedule D Tax Worksheet, by any of your capital gain excess not used in (1) above.

3. Reduce (but not below zero) the amount on your 2010 Schedule D (Form 1040), line 18, by your capital gain excess.

4. Include your capital gain excess as a loss on line 16 of your 2010 Unrecaptured Section 1250 Gain Worksheet in the 2010 Instructions for Schedule D (Form 1040).

Lines 19, 20, and 21

If you amended your return or the IRS made changes to it, enter the corrected amount.

J-14

Internal Revenue Service

2011 Instructions for Schedule R (Form 1040A or 1040)

Use Schedule R (Form 1040A or 1040) to figure the credit for the elderly orCredit for the the disabled. Additional information. See Pub. 524 for more details.Elderly or the

Disabled Income LimitsWho Can Take the Credit See the chart on page R-2.

The credit is based on your filing status, age, and in- come. If you are married filing a joint return, it is also based on your spouse’s age and income. You may be Want the IRS To Figure Your able to take this credit if either of the following applies. Credit?

1. You were age 65 or older at the end of 2011, or If you can take the credit and you want us to figure it for

2. You were under age 65 at the end of 2011 and you you, check the box in Part I of Schedule R (Form 1040Ameet all of the following. or 1040) for your filing status and age. Fill in Part II and

a. You were permanently and totally disabled on the lines 11 and 13 of Part III if they apply to you. If you file date you retired. If you retired before 1977, you must Form 1040A, enter “CFE” in the space to the left of have been permanently and totally disabled on January Form 1040A, line 30. If you file Form 1040, check box 1, 1976, or January 1, 1977. c on Form 1040, line 53, and enter “CFE” on the line

b. You received taxable disability income for 2011. next to that box. Attach Schedule R (Form 1040A or 1040) to your return.c. On January 1, 2011, you had not reached

mandatory retirement age (the age when your employer’s retirement program would have required

What Is Permanent and Totalyou to retire). Disability?For the definition of permanent and total disability,

see What Is Permanent and Total Disability? on this A person is permanently and totally disabled if both 1 page. Also, see the instructions for Part II. and 2 below apply.

1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.Married Persons Filing

2. A qualified physician determines that the condi-Separate Returns tion has lasted or can be expected to last continuously If your filing status is married filing separately and you for at least a year or can lead to death. lived with your spouse at any time during 2011, you cannot take the credit.

Examples 1 and 2, next, show situations in which the individuals are considered engaged in a substantial gainful activity. Example 3 shows a person who mightNonresident Aliens not be considered engaged in a substantial gainful activ-If you were a nonresident alien at any time during 2011, ity. In each example, the person was under age 65 at theyou may be able to take the credit only if your filing end of the year.status is married filing jointly.

R-1 Cat. No. 11357OOct 12, 2011

Income Limits for the Credit for the Elderly or the Disabled

THEN you generally cannot take the credit if:

The amount on Form 1040A, line 22, or IF you are . . . Form 1040, line 38, is . . . Or you received . . .

Single, head of household, or qualifying $17,500 or more $5,000 or more of nontaxable social widow(er) with dependent child security or other nontaxable pensions,

annuities, or disability income

Married filing jointly and only one $20,000 or more $5,000 or more of nontaxable social spouse is eligible for the credit security or other nontaxable pensions,

annuities, or disability income

Married filing jointly and both spouses $25,000 or more $7,500 or more of nontaxable social are eligible for the credit security or other nontaxable pensions,

annuities, or disability income

Married filing separately and you lived $12,500 or more $3,750 or more of nontaxable social apart from your spouse for all of 2011 security or other nontaxable pensions,

annuities, or disability income

Example 1. Sue retired on disability as a sales clerk. plan that does not provide for disability retirement is not disability income.She now works as a full-time babysitter earning mini-

mum wage. Although she does different work, Sue ba- In figuring the credit, disability income does not in- bysits on ordinary terms for the minimum wage. She clude any amount you received from your employer’s cannot take the credit because she is engaged in a sub- pension plan after you have reached mandatory retire- stantial gainful activity. ment age.

For more details on disability income, see Pub. 525.Example 2. Mary, the president of XYZ Corporation, retired on disability because of her terminal illness. On her doctor’s advice, she works part time as a manager and is paid more than the minimum wage. Her employer sets her days and hours. Although Mary’s illness is Part II. Statement of terminal and she works part time, the work is done at Permanent and Total Disabilityher employer’s convenience. Mary is considered en- gaged in a substantial gainful activity and cannot take If you checked box 2, 4, 5, 6, or 9 in Part I and you did the credit. not file a physician’s statement for 1983 or an earlier

year, or you filed or got a statement for tax years after Example 3. John, who retired on disability, took a job 1983 and your physician signed on line A of the state- with a former employer on a trial basis. The purpose of ment, you must have your physician complete a state- the job was to see if John could do the work. The trial ment certifying that: period lasted for some time during which John was paid • You were permanently and totally disabled on the at a rate equal to the minimum wage. But because of date you retired, or John’s disability, he was given only light duties of a • If you retired before 1977, you were permanentlynonproductive, make-work nature. Unless the activity is

and totally disabled on January 1, 1976, or January 1,both substantial and gainful, John is not engaged in a 1977.substantial gainful activity. The activity was gainful

because John was paid at a rate at or above the mini- You do not have to file this statement with your tax mum wage. However, the activity was not substantial return. But you must keep it for your records. You can because the duties were of a nonproductive, make-work use the physician’s statement later in these instructions nature. More facts are needed to determine if John is for this purpose. Your physician should show on the able to engage in a substantial gainful activity. statement if the disability has lasted or can be expected

to last continuously for at least a year, or if there is no reasonable probability that the disabled condition will

Disability Income ever improve. If you file a joint return and you checked box 5 in Part I, you and your spouse must each get aGenerally, disability income is the total amount you statement.were paid under your employer’s accident and health

plan or pension plan that is included in your income as If you filed a physician’s statement for 1983 or an wages or payments instead of wages for the time you earlier year, or you filed or got a statement for tax years were absent from work because of permanent and total after 1983 and your physician signed on line B of the disability. However, any payment you received from a statement, you do not have to get another statement for

R-2

Credit Limit Worksheet—Line 21 Keep for Your Records

2011. But you must check the box on line 2 in Part II to filing jointly with his wife who was age 67 in 2011, and certify all three of the following. he checked box 6 in Part I. On line 11, Bill enters

$9,000 ($5,000 plus the $4,000 of disability income he1. You filed or got a physician’s statement in an reports on Form 1040, line 7).earlier year. Example 2. John checked box 2 in Part I and enters2. You were permanently and totally disabled during $5,000 on line 10. He received $3,000 of taxable disa-2011. bility income, which he enters on line 11. John also3. You were unable to engage in any substantial enters $3,000 on line 12 (the smaller of line 10 or linegainful activity during 2011 because of your physical or 11). The largest amount he can use to figure the credit ismental condition. $3,000.

If you checked box 4, 5, or 6 in Part I, enter in the space above the box on line 2 in Part II the first name(s) Lines 13a Through 18of the spouse(s) for whom the box is checked.

The amount on which you figure your credit can beIf the Department of Veterans Affairs (VA) certifies reduced if you received certain types of nontaxablethat you are permanently and totally disabled, you can pensions, annuities, or disability income. The amountuse VA Form 21-0172 instead of the physician’s state- can also be reduced if your adjusted gross income isment. VA Form 21-0172 must be signed by a person over a certain amount, depending on which box youauthorized by the VA to do so. You can get this form checked in Part I.from your local VA regional office.

Line 13a. Enter any social security benefits (before de- duction of Medicare premiums) you (and your spouse if filing jointly) received for 2011 that are not taxable.Part III. Figure Your Credit Also, enter any tier 1 railroad retirement benefits treated as social security that are not taxable.

Line 11 If any of your social security or equivalent railroad retirement benefits are taxable, the amount to enter onIf you checked box 2, 4, 5, 6, or 9 in Part I, use the this line is generally the difference between the amountsfollowing chart to complete line 11. entered on Form 1040A, line 14a and line 14b, or Form

IF you checked . . . THEN enter on line 11 . . . 1040, line 20a and line 20b.

Box 6 The total of $5,000 plus the If your social security or equivalent railroaddisability income you reported on retirement benefits are reduced because ofForm 1040A or 1040 for the workers’ compensation benefits, treat thespouse who was under age 65.

workers’ compensation benefits as social security bene- Box 2, 4, or 9 The total amount of disability fits when completing Schedule R (Form 1040A or

income you reported on Form 1040), line 13a. 1040A or 1040.

Line 13b. Enter the total of the following types of in-Box 5 The total amount of disability come that you (and your spouse if filing jointly) re-income you reported on Form ceived for 2011.1040A or 1040 for both you and

your spouse. • Veterans’ pensions (but not military disability pensions).

Example 1. Bill, age 63, retired on permanent and total • Any other pension, annuity, or disability benefit disability in 2011. He received $4,000 of taxable disa- that is excluded from income under any provision of bility income that he reports on Form 1040, line 7. He is federal law other than the Internal Revenue Code. Do

Use this worksheet to figure your credit limit.

1. Enter the amount from Form 1040A, line 28; or Form 1040, line 46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the amount from Form 1040A, line 29; or Form 1040, lines 47 and 48 . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Subtract line 2 from line 1. Enter this amount on Schedule R (Form 1040A or 1040), line 21. But if zero or

less, STOP, you cannot take this credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

R-3

not include amounts that are treated as a return of your Administration or the Public Health Service. Also, do cost of a pension or annuity. not include a disability annuity payable under section

808 of the Foreign Service Act of 1980.Do not include on line 13b any pension, annuity, or similar allowance for personal injuries or sickness re- sulting from active service in the armed forces of any country, or in the National Oceanic and Atmospheric

Instructions for Physician’s Statement Taxpayer If you retired after 1976, enter the date you retired in the Physician space provided on the statement below.

A person is permanently and totally disabled if both of the following apply.

1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.

2. A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.

Physician’s Statement Keep for Your Records

I certify that Name of disabled person

was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the

date he or she retired. If retired after 1976, enter the date retired. �

Physician: Sign your name on either line A or B below.

A The disability has lasted or can be expected to last continuously for at least a year . . . . . . . . . . . . . . . . . .

Physician’s signature Date B There is no reasonable probability that the disabled

condition will ever improve . . . . . . . . . . . . . . . . . . . . Physician’s signature Date

Physician’s name Physician’s address

R-4

Internal Revenue Service

2011 Instructions for Schedule SE (Form 1040) Use Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment. The Social Security Administration uses the information from Schedule SE to figure yourSelf-Employment benefits under the social security program. This tax applies no matter how old you are and even if you are already getting social security or Medicare benefits.Tax Additional information. See Pub. 225 or Pub. 334.

it may be to your benefit to file Schedule If you have ever filed Form 2031 to elect social securitySE and use either ‘‘optional method’’ in coverage on your earnings as aPart II of Long Schedule SE (discussed minister, you cannot revokelater).

that election.What’s New Exception. If your only self-employment If you must pay SE tax, include this in- income was from earnings as a minister,More information. The IRS has created a come on either Short or Long Schedule SE, member of a religious order, or Christianpage on IRS.gov for information about line 2. But do not report it on Long Sched-

Form 1040 and its instructions, at www.irs. Science practitioner, see Ministers and ule SE, line 5a; it is not considered church gov/form1040. Information about any re- Members of Religious Orders. employee income. Also, include on line 2: cent developments affecting Schedule SE • The rental value of a home or an al- will be posted on that page. Who Must Pay lowance for a home furnished to you (in-

cluding payments for utilities), andMaximum income subject to social security Self-Employment (SE) Tax tax. The maximum amount of self-em- • The value of meals and lodging pro- ployment income subject to social security Self-Employed Persons vided to you, your spouse, and your depen- tax remains $106,800. dents for your employer’s convenience.You must pay SE tax if you had net earn-

ings of $400 or more as a self-employed However, do not include on line 2:Deduction for self-employed health insur- person. If you are in business (farm or non-ance. You can no longer reduce your net • Retirement benefits you received farm) for yourself, you are self-employed.self-employment income by the amount of from a church plan after retirement, or

your self-employed health insurance de- • The rental value of a home or an al-You must also pay SE tax on your shareduction (from line 29 of Form 1040 or lowance for a home furnished to you (in-of certain partnership income and yourForm 1040NR). cluding payments for utilities) afterguaranteed payments. See Partnership In- retirement.SE tax rate. For 2011, the Old Age, Survi- come or Loss, later. vors, and Disability Insurance (OASDI) If you were a duly ordained minister portion of the SE tax is reduced by 2%, who was an employee of a church and youEmployees of Churches and from 12.4% to 10.4%. The Medicare (HI) must pay SE tax, when figuring SE tax,Church Organizationsportion of the SE tax remains 2.9%. As a subtract on line 2 allowable expenses from

If you had church employee income ofresult, the SE tax rate is reduced from your self-employment earnings and attach $108.28 or more, you must pay SE tax.15.3% to 13.3%. an explanation. Please note that the un- Church employee income is wages you re- reimbursed employee business expensesSE tax deduction. For 2011, the SE tax de- ceived as an employee (other than as a min- that you incurred as an employee of theduction is revised to reflect an employer’s ister or member of a religious order) of a church are not allowable expenses for SEequivalent portion of tax. Previously, the church or qualified church-controlled or- tax purposes, and are allowed only as andeduction was equal to one-half of self-em- ganization that has a certificate in effect itemized deduction for income tax pur-ployment tax. electing an exemption from employer so- poses. cial security and Medicare taxes. If you were a U.S. citizen or resident

alien serving outside the United States as aMinisters and Members of minister or member of a religious order andGeneral Instructions Religious Orders you must pay SE tax, you cannot reduce Who Must File Schedule SE In most cases, you must pay SE tax on sala- your net earnings by the foreign earned in-

ries and other income for services you per- come exclusion or the foreign housing ex-You must file Schedule SE if: clusion or deduction.formed as a minister, a member of a• The amount on line 4 of Short Sched-

religious order who has not taken a vow of See Pub. 517 for details.ule SE or line 4c of Long Schedule SE is poverty, or a Christian Science practitioner.$400 or more, or Members of Certain ReligiousBut if you filed Form 4361 and received• You had church employee income of SectsIRS approval, you will be exempt from

$108.28 or more. Income from services you paying SE tax on those net earnings. If you If you have conscientious objections to so-performed as a minister or a member of a had no other income subject to SE tax, cial security insurance because of yourreligious order is not church employee in- enter “Exempt — Form 4361” on Form membership in and belief in the teachingscome. See Employees of Churches and 1040, line 56, or Form 1040NR, line 54. of a religious sect recognized as being inChurch Organizations. However, if you had other net earnings of existence at all times since December 31, $400 or more subject to SE tax, see line ANote. Even if you had a loss or a small 1950, and which has provided a reasonable

amount of income from self-employment, at the top of Long Schedule SE. level of living for its dependent members,

SE-1 Cat. No. 24334POct 14, 2011

you are exempt from SE tax if you received Programs website at www.socialsecurity. combined net earnings from all of your IRS approval by filing Form 4029. In this gov/international; businesses. If you had a loss in one busi- case, do not file Schedule SE. Instead, enter ness, it reduces the income from another.2. Call the SSA’s Office of International “Exempt—Form 4029” on Form 1040, Figure the combined SE tax on one Sched-Programs at: line 56, or Form 1040NR, line 54. See Pub. ule SE.

a. (410) 965-3322 for questions on ben-517 for details. efits under agreements, or Joint Returns

U.S. Citizens Employed by b. (410) 965-7306 for questions on the Show the name of the spouse with self-em-Foreign Governments or coverage rules of the agreements; or ployment income on Schedule SE. If bothInternational Organizations 3. Write to: spouses have self-employment income, You must pay SE tax on income you earned each must file a separate Schedule SE.a. Social Security Administration, Of-as a U.S. citizen employed by a foreign However, if one spouse qualifies to usefice of International Programs, P.O. Boxgovernment (or, in certain cases, by a Short Schedule SE (front of form) and the17741, Baltimore, MD 21235-7741 USAwholly owned instrumentality of a foreign other must use Long Schedule SE (back offor information about an agreement, orgovernment or an international organiza- form), both can use the same form. One

b. Social Security Administration,tion under the International Organizations spouse should complete the front and the OIO—Totalization, P.O. Box 17769, Bal-Immunities Act) for services performed in other the back. timore, MD 21235-7769 USA for informa-the United States, Puerto Rico, Guam, Include the total profits or losses fromtion about a claim for benefits.American Samoa, the Commonwealth of all businesses on Form 1040. Enter the

the Northern Mariana Islands, or the U.S. combined SE tax on Form 1040, line 56.If your self-employment income is ex-Virgin Islands. Report income from this empt from SE tax, you should get a state-employment on either Short or Long Community Incomement from the appropriate agency of theSchedule SE, line 2. If you performed serv-

The following rules only applyforeign country verifying that yourices elsewhere as an employee of a foreign to persons married for federalself-employment income is subject to so-government or an international organiza- tax purposes. Registered do-cial security coverage in that country. If thetion, those earnings are exempt from SE mestic partners and same-sexforeign country will not issue the state-tax.

spouses in California report community in-ment, contact the SSA at the address shown Exception—Dual citizens. A person with come for self-employment tax purposes thein (3a) above. Do not complete Schedule dual U.S.-foreign citizenship is generally same way they do for income tax purposes.SE. Instead, attach a copy of the statement considered to be a U.S. citizen for social For more information, see Pub. 555.to Form 1040 and enter “Exempt, see at- security purposes. However, if you are a tached statement” on Form 1040, line 56. If any of the income from a business (in-U.S. citizen and also a citizen of a country cluding farming) is community income,Nonresident Alienwith which the United States has a bilateral then the income and deductions are re-social security agreement, other than Can- If you are a self-employed nonresident ported based on the following.ada or Italy, your work for the government alien living in the United States, you must • If only one spouse participates in theof that foreign country is always exempt pay SE tax if an international social secur-

business, all of the income from that busi-from U.S. social security taxes. For further ity agreement in effect determines that you ness is the self-employment earnings of theinformation about these agreements, see are covered under the U.S. social security spouse who carried on the business.the exception shown in the next section. system. See Exception under U.S. Citizens

• If both spouses participate, the incomeor Resident Aliens Living Outside theU.S. Citizens or Resident Aliens and deductions are allocated to the spousesUnited States, earlier, for information Living Outside the United States based on their distributive shares.about international social security agree-

ments. If your self-employment income isIf you are a self-employed U.S. citizen or • If either or both you and your spouse subject to SE tax, complete Schedule SEresident alien living outside the United are partners in a partnership, see Partner- and file it with your Form 1040NR.States, in most cases you must pay SE tax. ship Income or Loss, later.

You cannot reduce your foreign earnings • If you and your spouse elected to treatChapter 11 Bankruptcy Casesfrom self-employment by your foreign the business as a qualifying joint venture, While you are a debtor in a chapter 11earned income exclusion. see Qualified Joint Ventures, later. bankruptcy case, your net profit or loss

Exception. The United States has social Married filing separately. If you and yourfrom self-employment (for example, from security agreements with many countries to spouse had community income and fileSchedule C or Schedule F) will not be in- eliminate dual taxes under two social secur- separate returns, attach Schedule SE to thecluded in your Form 1040 income. Instead, ity systems. Under these agreements, you return of the spouse with the self-employ-it will be included on the income tax return must generally pay social security and ment income. Also, attach Schedule(s) C,(Form 1041) of the bankruptcy estate. Medicare taxes to only the country you live C-EZ, or F (showing the spouse’s share ofHowever, you (not the bankruptcy estate) in. community income and expenses) to the re-are responsible for paying SE tax on your

turn of each spouse.net earnings from self-employment.The United States now has social secur- ity agreements with the following coun- If you are the spouse who carried on theEnter on the dotted line to the left of tries: Australia, Austria, Belgium, Canada, business, you must include on ScheduleSchedule SE, line 3, “Chap. 11 bankruptcy Chile, Czech Republic, Denmark, Finland, SE, line 3, the net profit or (loss) reportedincome” and the amount of your net profit France, Germany, Greece, Ireland, Italy, on the other spouse’s Schedule C, C-EZ, oror (loss). Combine that amount with the to- Japan, Luxembourg, the Netherlands, Nor- F (except in those cases described latertal of lines 1a, 1b, and 2 (if any) and enter way, Poland, Portugal, South Korea, Spain, under Income and Losses Not Included inthe result on line 3. Sweden, Switzerland, and the United King- Net Earnings From Self-Employment).

For other reporting requirements, seedom. Additional agreements are expected Enter on the dotted line to the left of Sched- Chapter 11 Bankruptcy Cases in the in-in the future. ule SE, line 3, “Community income taxed structions for Form 1040. to spouse” and the amount of any net profitIf you have questions about interna- or (loss) allocated to your spouse as com-tional social security agreements, you can: More Than One Business munity income. Combine that amount with

1 . V i s i t t h e S o c i a l S e c u r i t y If you had two or more businesses, your net the total of lines 1a, 1b, and 2 and enter the Administration’s (SSA’s) International earnings from self-employment are the result on line 3.

SE-2

If you are not the spouse who carried on Fiscal Year Filers • If the total of lines 1a and 2 is $434 or the business and you had no other income more, file Schedule SE (completed throughIf your tax year is a fiscal year, use the taxsubject to SE tax, enter “Exempt commu- line 4c) with your tax return. Enter -0- onrate and earnings base that apply at the timenity income” on Form 1040, line 56, or Form 1040, line 56,* or Form 1040NR, linethe fiscal year begins. Do not prorate theForm 1040NR, line 54. Do not file Sched- 54.*tax or earnings base for a fiscal year thatule SE. However, if you had $400 or more • If the total of lines 1a and 2 is less thanoverlaps the date of a rate or earnings baseof other net earnings subject to SE tax, in- $434, do not file Schedule SE unless youchange.clude on Schedule SE, line 1a or 2, the net choose to use an optional method to figureprofit or (loss) from Schedule(s) C, C-EZ, your SE tax.or F allocated to you as community income. *If you also have church employee incomeAlso, enter on the dotted line to the left of Line Instructions (described earlier under Employees ofSchedule SE, line 3, “Exempt community Churches and Church Organizations), alsoRead the flowchart on page 1 of Scheduleincome” and the allocated amount. If that complete lines 5a and 5b. Complete the restSE to see if you can use Section A—Shortamount is a net profit, subtract it from the of Schedule SE, as appropriate.Schedule SE, or if you must use Sectiontotal of lines 1a, 1b, and 2, and enter the

B—Long Schedule SE. For either section,result on line 3. If that amount is a loss, you will need to know what your net earn-treat it as a positive amount, add it to the ings from self-employment are. To find outtotal of lines 1a, 1b, and 2, and enter the Net Earnings From what is included as net earnings fromresult on line 3. Self-Employmentself-employment, see Net Earnings From

Community income included Self-Employment. In most cases, net earnings include your net on Schedule(s) C, C-EZ, or F profit from a farm or nonfarm business.Enter all negative amounts inmust be divided for income tax

parentheses.purposes based on the commu- Partnership Income or Loss nity property laws of your state. See Pub.

TIP If you were a general or limited partner in a555 for more information. partnership, include on line 1a or line 2,

You Have Only Church whichever applies, the amount of net earn-Qualified Joint Ventures ings from self-employment from ScheduleEmployee Income Subject toIf you and your spouse materially partici- K-1 (Form 1065), box 14, code A, andpate (see Material participation in the 2011 SE Tax Schedule K-1 (Form 1065-B), box 9, codeInstructions for Schedule C) as the only If your only income subject to SE tax is J1. General partners should reduce thismembers of a jointly owned and operated church employee income (described earlier amount by certain expenses before enteringbusiness, and you file a joint return for the under Employees of Churches and Church it on Schedule SE. See your Schedule K-1tax year, you can make a joint election to be Organizations), skip lines 1 through 4b. instructions. If you reduce the amount youtaxed as a qualified joint venture instead of Enter -0- on line 4c and go to line 5a. enter on Schedule SE, you must attach ana partnership. explanation. Limited partners include only

Note. Income from services you performTo make this election, you must divide guaranteed payments for services actuallyas a minister of a religious order is notall items of income, gain, loss, deduction, rendered to or on behalf of the partnership.church employee income.and credit attributable to the business be- If a partner died and the partnershiptween you and your spouse in accordance Line 1b (Short or Long continued, include in self-employment in-with your respective interests in the ven-

come the deceased’s distributive share ofSchedule SE)ture. Each of you must file a separate the partnership’s ordinary income or lossSchedule C, C-EZ, or F. On each line of If you were receiving social security retire- through the end of the month in which he oryour separate Schedule C, C-EZ, or F, you ment or social security disability benefits at she died. See section 1402(f).must enter your share of the applicable in- the time you received your Conservation

come, deduction, or loss. Each of you also If you were married and both you andReserve Program (CRP) payment(s), enter must file a separate Schedule SE to pay SE your spouse were partners in a partnership,the amount of your taxable CRP tax, as applicable. each of you must report your net earningspayment(s) on line 1b. These payments are

from self-employment from the partner-included on Schedule F, line 4b, or listedFor more information on qualified joint ship. Each of you must file a separateon Schedule K-1 (Form 1065), box 20,ventures, go to IRS.gov. Enter “qualified Schedule SE and report the partnership in-code Y.joint venture” in the search box and select come or loss on Schedule E (Form 1040),“Election for Husband and Wife Unincorp- Line 4 (Short Schedule SE) Part II, for income tax purposes. If only oneorated Businesses.” of you was a partner in a partnership, theIf line 4 is less than $400 and you have an spouse who was the partner must report hisRental real estate business. If you and amount on line 1b, combine lines 1a and 2. or her net earnings from self-employmentyour spouse make the election for your • If the total of lines 1a and 2 is $434 or from the partnership.rental real estate business, the income gen-

more, file Schedule SE (completed througherally is not subject to SE tax. To indicate line 4) with your tax return. Enter -0- on Community income. Your own distribu-that election, be sure to check the “QJV” Form 1040, line 56, or Form 1040NR, line tive share of partnership income is includedbox in Part I, line 2, of each Schedule E that 54. in figuring your net earnings from self-em-the rental property is listed on. Do not file

ployment. Unlike the division of that in-• If the total of lines 1a and 2 is less thanSchedule SE unless you have other income come between spouses for figuring income$434, do not file Schedule SE unless yousubject to SE tax. For an exception to this tax, no part of your share can be included inchoose to use an optional method for figur-income not being subject to SE tax, see figuring your spouse’s net earnings froming your SE tax.item 3 under Other Income and Losses In- self-employment.cluded in Net Earnings From Self-Employ-

Lines 4a Through 4c (Longment, later). Registered domestic partnersSchedule SE)If the election is made for a farm rental and same-sex spouses in Cali- business that is not included in self-em- If both lines 4a and 4c are less than $400 fornia report community in- ployment, file two Forms 4835, Farm and you have an amount on line 1b, com- come for self-employment tax Rental Income and Expenses. bine lines 1a and 2. purposes the same way they do for income

SE-3

tax purposes. For more information, see basis and the job was not covered under a production or management of the produc- Pub. 555. federal-state social security coverage tion of farm products on the land. See chap-

agreement. ter 12 of Pub. 225 for details. Report this Share Farming income on Form 4835. Use two Forms9. Interest received in the course of any

4835 if you and your spouse made an elec-You are considered self-employed if you trade or business, such as interest on notes tion to be taxed as a qualified joint venture.produced crops or livestock on someone or accounts receivable.

else’s land for a share of the crops or live- 6. Payments you receive from the Con-10. Fees and other payments received by stock produced (or a share of the proceeds servation Reserve Program if you are re-you for services as a director of a corpora- from the sale of them). This applies even if ceiving social security benefits fortion. you paid another person (an agent) to do the retirement or disability. Deduct these pay-11. Recapture amounts under sectionsactual work or management for you. Report ments on line 1b of Schedule SE.179 and 280F that you included in grossyour net earnings for income tax purposes 7. Dividends on shares of stock and in-income because the business use of theon Schedule F (Form 1040) and for SE tax property dropped to 50% or less. Do not terest on bonds, notes, etc., if you did notpurposes on Schedule SE. See Pub. 225 for include amounts you recaptured on the dis- receive the income in the course of yourdetails. position of property. See Form 4797. trade or business as a dealer in stocks or

securities.12. Fees you received as a professionalOther Income and Losses fiduciary. This may also apply to fees paid 8. Gain or loss from:Included in Net Earnings to you as a nonprofessional fiduciary if the

a. The sale or exchange of a capital as-From Self-Employment fees relate to active participation in the op- set;eration of the estate’s business, or the man-1. Rental income from a farm if, as land-

b. The sale, exchange, involuntary con-agement of an estate that required extensivelord, you materially participated in the pro- version, or other disposition of property un-management activities over a long periodduction or management of the production less the property is stock in trade or otherof time.of farm products on this land. This income property that would be includible in inven-is farm earnings. To determine whether you 13. Gain or loss from section 1256 con- tory, or held primarily for sale to customersmaterially participated in farm manage- tracts or related property by an options or in the ordinary course of the business; orment or production, do not consider the ac- commodities dealer in the normal course of

tivities of any agent who acted for you. The c. Certain transactions in timber, coal,dealing in or trading section 1256 con- material participation tests for landlords are or domestic iron ore.tracts. explained in chapter 12 of Pub. 225. 9. Net operating losses from other years.

2. Cash or a payment-in-kind from the 10. Termination payments you receivedIncome and Losses Not Department of Agriculture for participating as a former insurance salesperson if all ofIncluded in Net Earningsin a land diversion program. the following conditions are met.From Self-Employment3. Payments for the use of rooms or

a. The payment was received from another space when you also provided sub- insurance company because of services you1. Salaries, fees, etc., subject to socialstantial services for the convenience of

security or Medicare tax that you received performed as an insurance salesperson foryour tenants. Examples are hotel rooms, for performing services as an employee, in- the company.boarding houses, tourist camps or homes, cluding services performed as an employee b. The payment was received after ter-trailer parks, parking lots, warehouses, and under the railroad retirement system. This mination of your agreement to performstorage garages. See chapter 5 of Pub. 334 includes services performed as a public of- services for the company.for more information. ficial (except as a fee basis government em-

c. You did not perform any services for4. Income from the retail sale of news- ployee as explained in item 8 under Other the company after termination and beforepapers and magazines if you were age 18 or Income and Losses Included in Net Earn- the end of the year in which you receivedolder and kept the profits. ings From Self-Employment, earlier. the payment.5. Income you receive as a direct seller. 2. Fees received for services performed

d. You entered into a covenant not toNewspaper carriers or distributors of any as a notary public. If you had no other in- compete against the company for at least aage are direct sellers if certain conditions come subject to SE tax, enter “Ex-

apply. See chapter 5 of Pub. 334 for details. 1-year period beginning on the date of ter-empt—Notary” on Form 1040, line 56. Do mination.6. Amounts received by current or for- not file Schedule SE. However, if you had

mer self-employed insurance agents and e. The amount of the payment dependedother net earnings of $400 or more subject salespersons that are: primarily on policies sold by or credited toto SE tax, enter “Exempt—Notary” and

your account during the last year of thethe amount of your net profit as a notarya. Paid after retirement but figured as a agreement, or the extent to which those pol-public from Schedule C or Schedule C-EZpercentage of commissions received from icies remain in force for some period afteron the dotted line to the left of Schedulethe paying company before retirement,

SE, line 3. Subtract that amount from the termination, or both. b. Renewal commissions, or total of lines 1a, 1b, and 2, and enter the f. The amount of the payment did not c. Deferred commissions paid after re- result on line 3. depend to any extent on length of service or

tirement for sales made before retirement. 3. Income you received as a retired part- overall earnings from services performed However, certain termination payments re- ner under a written partnership plan that for the company (regardless of whether eli- ceived by former insurance salespersons provides for lifelong periodic retirement gibility for the payment depended on length are not included in net earnings from payments if you had no other interest in the of service). self-employment (as explained in item 10 partnership and did not perform services under Income and Losses Not Included in for it during the year.

Statutory Employee IncomeNet Earnings From Self-Employment). 4. Income from real estate rentals if you 7. Income of certain crew members of did not receive the income in the course of If you were a statutory employee, do not

fishing vessels with crews of normally a trade or business as a real estate dealer. include the net profit or (loss) from Sched- fewer than 10 people. See chapter 10 of Report this income on Schedule E. ule C, line 31 (or the net profit from Sched- Pub. 334 for details. ule C-EZ, line 3), on Short or Long5. Income from farm rentals (including

Schedule SE, line 2. But if you file Long8. Fees as a state or local government rentals paid in crop shares) if, as landlord, Schedule SE, be sure to include statutoryemployee if you were paid only on a fee you did not materially participate in the

SE-4

employee social security wages and tips Changing Your Method • Schedule C (Form 1040), line 31, from Form W-2 on line 8a. You can change the method after you file • Schedule C-EZ (Form 1040), line 3,

your return. That is, you can change fromOptional Methods • Schedule K-1 (Form 1065), box 14, the regular to the optional method or from code A (from other than farm partnerships), the optional to the regular method. To doHow Can the Optional Methods and this, file Form 1040X.Help You • Schedule K-1 (Form 1065-B), Farm Optional Method box 9, code J1.Social security coverage. The optional

methods may give you credit toward your You may use this method to figure your net To use this method, you also must be social security coverage even though you earnings from farm self-employment if regularly self-employed. You meet this re- have a loss or a small amount of income your gross farm income was $6,720 or less quirement if your actual net earnings from from self-employment. or your net farm profits were less than self-employment were $400 or more in 2 of

$4,851. Net farm profits are: the 3 years preceding the year you use theEarned income credit (EIC). Using the op- nonfarm optional method. The net earnings• The total of the amounts from Sched-tional methods may qualify you to claim of $400 or more could be from either farmule F (Form 1040), line 34, and Schedulethe EIC or give you a larger credit if your or nonfarm earnings or both. The net earn-K-1 (Form 1065), box 14, code A, minusnet earnings from self-employment (deter- ings include your distributive share of part-mined without using the optional methods) • The amount you would have entered nership income or loss subject to SE tax.are less than $4,480. Figure the EIC with on Schedule SE, line 1b, had you not used

and without using the optional methods to Use of the nonfarm optional methodthe optional method. see if the optional methods will benefit you. from nonfarm self-employment is limitedThere is no limit on how many years

to 5 years. The 5 years do not have to beyou can use this method.Additional child tax credit. Using the op- consecutive.tional methods may qualify you to claim Under this method, report in Part II, line

Under this method, report in Part II, linethe additional child tax credit or give you a 15, two-thirds of your gross farm income, 17, two-thirds of your gross nonfarm in-larger credit if your net earnings from up to $4,480, as your net earnings. This come, up to the amount on line 16, as yourself-employment (determined without us- method can increase or decrease your net net earnings. But you cannot report lessing the optional methods) are less than earnings from farm self-employment even than your actual net earnings from nonfarm$4,480. Figure the additional child tax if the farming business had a loss. self-employment.credit with and without using the optional

For a farm partnership, figure your sharemethods to see if the optional methods will Figure your share of gross income fromof gross income based on the partnershipbenefit you. a nonfarm partnership in the same manneragreement. With guaranteed payments, as a farm partnership. See Farm OptionalChild and dependent care credit. The op- your share of the partnership’s gross in- Method for details.tional methods may help you qualify for come is your guaranteed payments plus

this credit or give you a larger credit if your your share of the gross income after it is Using Both Optional Methods net earnings from self-employment (deter- reduced by all guaranteed payments made If you can use both methods, you can reportmined without using the optional methods) by the partnership. If you were a limited less than your total actual net earnings fromare less than $4,480. Figure this credit with partner, include only guaranteed payments farm and nonfarm self-employment, butand without using the optional methods to for services you actually rendered to or on you cannot report less than your actual netsee if the optional methods will benefit you. behalf of the partnership. earnings from nonfarm self-employment Self-employed health insurance deduction. Nonfarm Optional Method alone. The optional methods of computing net If you use both methods to figure netYou may be able to use this method to fig-earnings from self-employment may be earnings, you cannot report more thanure your net earnings from nonfarmused to figure your self-employed health $4,480 of net earnings from self-employ-self-employment if your net nonfarm prof-insurance deduction. ment.its were less than $4,851 and also less than

72.189% of your gross nonfarm income.Using the optional methods Net nonfarm profits are the total of themay give you the benefits de- amounts from:scribed above, but they may

also increase your SE tax.

SE-5

Index to Instructions

Qualified retirement plans, deduction for . . . . . 28A G Qualified tuition program earnings . . . . . . . 27, 42Address change . . . . . . . . . . . . . . . . . . . . . 12 Gambling . . . . . . . . . . . . . . . . . . . . . . . . 27

Addresses of IRS centers . . . . . . . . . . . Last Page Golden parachute payments . . . . . . . . . . . . . 43 Adjusted gross income . . . . . . . . . . . . . . 28-33 Group-term life insurance, uncollected tax R

on . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Adoption expenses: Railroad retirement benefits: Employer-provided benefits for . . . . . . . . . 19 Treated as a pension . . . . . . . . . . . . . . . . 23

Treated as social security . . . . . . . . . . . . . 25Aliens . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 H Records, how long to keep . . . . . . . . . . . . . . 88Alimony paid . . . . . . . . . . . . . . . . . . . . . . 29 Head of household . . . . . . . . . . . . . . . . . . . 13 Refund . . . . . . . . . . . . . . . . . . . . . . . . 69-71Alimony received . . . . . . . . . . . . . . . . . . . 22 Health insurance deduction, self-employed . . . . 28 Refund information . . . . . . . . . . . . . . . . . . 90Alternative minimum tax . . . . . . . . . . . . . . 6, 38 Health savings accounts . . . . . . . . 27, 28, 42, 43 Refund offset . . . . . . . . . . . . . . . . . . . . . . 69Amended return . . . . . . . . . . . . . . . . . . . . 88 Homebuyer credit, first-time . . . . . . . . . 6, 43, 69 Refunds, credits, or offsets of state and local incomeAmount you owe . . . . . . . . . . . . . . . . . 71-72 Household Employment Taxes . . . . . . . . . . . 43

taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 21Annuities . . . . . . . . . . . . . . . . . . . . . . 23-25 How to comment on forms . . . . . . . . . . . . . 94 Reservists, expenses of . . . . . . . . . . . . . . . . 28Archer MSAs . . . . . . . . . . . . . . . . . 27, 42, 43 Resident aliens . . . . . . . . . . . . . . . . . . . . . . 7Attachments to the return . . . . . . . . . . . . . . 73 I Residential energy efficient property credit . . . 42Identity Protection PIN . . . . . . . . . . . . . . . . 73 Retirement plan deduction, self-employed . . . . 28B Identity theft . . . . . . . . . . . . . . . . . . . . . . 87 Retirement savings contributions credit . . . . . . 38Bankruptcy cases, chapter 11 . . . . . . . . . . . . 19 Income . . . . . . . . . . . . . . . . . . . . . . . . 19-27 Rights of taxpayers . . . . . . . . . . . . . . . . . . 87Blindness . . . . . . . . . . . . . . . . . . . . . . 33, 35 Income tax withholding (federal) . . . . . . . . 44, 87 Rollovers . . . . . . . . . . . . . . . . . . . . . . 22, 25Individual retirement arrangements (IRAs): Roth IRAs . . . . . . . . . . . . . . . . . . . 22, 25, 29Contributions to (line 32) . . . . . . . . . . . 29-31C Rounding off to whole dollars . . . . . . . . . . . 19Credit for contributions to . . . . . . . . . . . . 38Capital gain distributions . . . . . . . . . . . . . . . 22

Distributions from (lines 15a and 15b) . . . . . 22Child and dependent care expenses, credit Nondeductible contributions to . . . . . 22, 29-31 Sfor . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Individual taxpayer identification numbers . . . . 12 Saver’s credit . . . . . . . . . . . . . . . . . . . . . . 38Child tax credits . . . . . . . . . . . . . 15, 39-40, 69 Injured spouse . . . . . . . . . . . . . . . . . . . . . 69 Scholarship and fellowship grants . . . . . . . . . 19Community property states . . . . . . . . . . . . . 19 Innocent spouse relief . . . . . . . . . . . . . . . . . 87 Self-employment tax:Contributions to reduce debt held by the Installment payments . . . . . . . . . . . . . . . 71, 92 Deduction for one-half of . . . . . . . . . . . . . 28public . . . . . . . . . . . . . . . . . . . . . . . . . 88 Interest income: Signing your return . . . . . . . . . . . . . . . . . . 72Corrective distributions . . . . . . . . . . . . . . . . 20

Taxable . . . . . . . . . . . . . . . . . . . . . . . . 20 Single person . . . . . . . . . . . . . . . . . . . . . . 12 Tax-exempt . . . . . . . . . . . . . . . . . . . . . 20 Social security and equivalent railroad retirementD Interest on taxes . . . . . . . . . . . . . . . . . . . . 89 benefits . . . . . . . . . . . . . . . . . . . . . . 25-27Daycare center expenses . . . . . . . . . . . . . . . 38 Itemized deductions or standard Social security number . . . . . . . . . . . . . . . . 12Death of a taxpayer . . . . . . . . . . . . . . . . . . 88 deduction . . . . . . . . . . . . . . . . . . . . . 33-35 Standard deduction or itemizedDeath of spouse . . . . . . . . . . . . . . . . . . 14, 88 deductions . . . . . . . . . . . . . . . . . . . . 33-35Dependent care benefits . . . . . . . . . . . . . . . 19 J State and local income taxes, taxable refunds,Dependents: Jury duty pay . . . . . . . . . . . . . . . . . . . . . . 27 credits, or offsets of . . . . . . . . . . . . . . . . 21Exemptions for . . . . . . . . . . . . . . . . . . . 15 Statutory employees . . . . . . . . . . . . . . . . . . 20Standard deduction . . . . . . . . . . . . . . . . . 35

Student loan interest deduction . . . . . . . . . . . 32LDirect deposit of refund . . . . . . . . . . . . . 70-71 Line instructions for Form 1040 . . . . . . . . 12-73Disclosure, Privacy Act, and Paperwork Reduction Living abroad, U.S. citizens and resident TAct Notice . . . . . . . . . . . . . . . . . . . . . . 94

aliens . . . . . . . . . . . . . . . . . . . . . . . . 7, 19 Table of contents . . . . . . . . . . . . . . . . . . . . 3Dividends: Long-term care insurance . . . . . . . . . . . . . . 28 Tax and credits . . . . . . . . . . . . . . . . . . . 33-43Nondividend distributions . . . . . . . . . . . . . 20 Lump-sum distributions . . . . . . . . . . . . . . . 25 Figured by the IRS . . . . . . . . . . . . . . . 35, 47Ordinary dividends . . . . . . . . . . . . . . . . . 20

Other taxes:Qualified dividends . . . . . . . . . . . . . . . 20, 35 Alternative minimum tax . . . . . . . . . . . . 38Domestic production activities deduction . . . . . 33 M IRAs and other tax-favored accounts . . . . 42Dual-status aliens . . . . . . . . . . . . . . . . . . 7, 13 Married persons: Lump-sum distributions . . . . . . . . . . . . 25Filing joint returns . . . . . . . . . . . . . . . . . 12 Recapture . . . . . . . . . . . . . . . . . . . . . 43Filing separate returns . . . . . . . . . . . . . . . 13E Tax computation worksheet . . . . . . . . . . . . . 86Living apart . . . . . . . . . . . . . . . . . . . . . 13Earned income credit (EIC) . . . . . . . . . . . 45-68 Tax Counseling for the Elderly (TCE) . . . . . 5, 88Mileage rates, standard . . . . . . . . . . . . . . . . . 6Combat pay, nontaxable . . . . . . . . . . . . . . 47 Tax rate schedules . . . . . . . . . . . . . . . . . . . 98Mortgage interest credit . . . . . . . . . . . . . . . 42Education: Tax table . . . . . . . . . . . . . . . . . . . . . . . 74-85Moving expenses . . . . . . . . . . . . . . . . . . 6, 28Credits . . . . . . . . . . . . . . . . . . . . . . 38, 69

Taxpayer Advocate Service (TAS) . . . . . . . . . . 4Expenses . . . . . . . . . . . . . . . . . . 32, 38, 69 Telephone assistance:Recapture of education credits . . . . . . . . . . 35 N Federal tax information . . . . . . . . . . . . 90-92Savings accounts . . . . . . . . . . . . . . . . 27, 42 Name change . . . . . . . . . . . . . . . . . . . . . . 12 TeleTax . . . . . . . . . . . . . . . . . . . . . . 90-91Educator expenses . . . . . . . . . . . . . . . . . . . 28 Nonbusiness energy property credit . . . . . . . . 42 Third party designee . . . . . . . . . . . . . . . . . 72Elderly persons: Nonresident aliens . . . . . . . . . . . . . . . 7, 12, 13 Tip income . . . . . . . . . . . . . . . . . . . . . 19, 42Credit for . . . . . . . . . . . . . . . . . . . . . . . 42

Standard deduction . . . . . . . . . . . . . . . . . 35 Tips reported to employer, uncollected taxO on . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Electric vehicles . . . . . . . . . . . . . . . . . . . . 42 Offsets . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Tuition and fees . . . . . . . . . . . . . . . . . . . . 33Electronic filing (e-file) . . . . 5, 7, 10, 12, 70, 71, Order form for forms and publications . . . . . . 9672-73, 93 Tuition program earnings . . . . . . . . . . . . 27, 42 Other income . . . . . . . . . . . . . . . . . . . . . . 27Estimated tax . . . . . . . . . . . . . . . . . 44, 71, 87 Other taxes . . . . . . . . . . . . . . . . . . . . . 42-43Excess salary deferrals . . . . . . . . . . . . . . . . 19 U

Excess social security and tier 1 RRTA tax Unemployment compensation . . . . . . . . . . . . 25 Pwithheld . . . . . . . . . . . . . . . . . . . . . . . 69 Pay taxes electronically (e-pay) . . . . . . . . . . . 71Exemptions . . . . . . . . . . . . . . . . . . . . . . . 14 V Payments . . . . . . . . . . . . . . . . . . . . . . 44-69Expired tax benefits . . . . . . . . . . . . . . . . . . . 6 Volunteer Income Tax Assistance Program Penalty:Extension of time to file . . . . . . . . . . . . . . 7, 69 (VITA) . . . . . . . . . . . . . . . . . . . . . . . 5, 88

Early withdrawal of savings . . . . . . . . . . . 29 Estimated tax . . . . . . . . . . . . . . . . . . 71-72F WOthers (including late filing and lateFiling requirements . . . . . . . . . . . . . . . . . . 7-9 What if you cannot pay? . . . . . . . . . . . . . 71, 92payment) . . . . . . . . . . . . . . . . . . . . . . 89

Filing status, which box to check . . . . . . . . 12-14 What’s new . . . . . . . . . . . . . . . . . . . . . . . . 6Penalty on early withdrawal of savings . . . . . . 29 Foreign accounts and trusts . . . . . . . . . . . . . 19 When and where should you file? . . . . . . . . . . 7Pensions and annuities . . . . . . . . . . . . . . 23-25 Foreign tax credit . . . . . . . . . . . . . . . . . . . 38 Where do you file? . . . . . . . . . . . . . . Last PagePresidential election $3 check-off . . . . . . . . . 12 Foreign-source income . . . . . . . . . . . . . . . . 19 Who must file . . . . . . . . . . . . . . . . . . . . 7, 9Private delivery services . . . . . . . . . . . . . . . . 7 Form W-2 . . . . . . . . . . . . . . . . . . . . . . . . 20 Who should file . . . . . . . . . . . . . . . . . . . . . 7Public debt, gift to reduce the . . . . . . . . . . . . 88 Forms W-2, 1098, and 1099 — where to report Widows and widowers, qualifying . . . . . . . . . 14Publications, how to get . . . . . . . . . . . . . . . 93certain items from . . . . . . . . . . . . . . . . . 10 Winnings, prizes, gambling, and lotteries (other Forms, how to get . . . . . . . . . . . . . . . . . . . 93 income) . . . . . . . . . . . . . . . . . . . . . . . . 27QFree tax help . . . . . . . . . . . . . . . . . . . . 88, 93 Withholding, federal income tax . . . . . . . . 44, 87Qualified dividends . . . . . . . . . . . . . . . . . . 35

Qualified dividends and capital gain tax worksheet . . . . . . . . . . . . . . . . . . . . . . . 35

- 99 -

Where Do You File?

IF you live in...

Alabama, Georgia, North Carolina, South Carolina

Florida, Louisiana, Mississippi, Texas

Arkansas, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, Utah, Wisconsin, Wyoming

Are enclosing a check or money order...

Are not enclosing a check or money order...

Department of the Treasury Internal Revenue Service Austin, TX 73301-0002

Department of the Treasury Internal Revenue Service Fresno, CA 93888-0002

THEN use this address if you:

TIP

A foreign country, U.S. possession or territory*, or use an APO or FPO address, or file Form 2555, 2555-EZ, or 4563, or are a dual-status alien

Internal Revenue Service P.O. Box 105017 Atlanta, GA 30348-5017

Alaska, Arizona, California, Colorado, Hawaii, Nevada, Oregon, Washington

Kentucky, Tennessee, Missouri, New Jersey, Virginia, West Virginia

Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont

*If you live in American Samoa, Puerto Rico, Guam, the U.S. Virgin Islands, or the Northern Mariana Islands, see Pub. 570.

Internal Revenue Service P.O. Box 1214 Charlotte, NC 28201-1214

Internal Revenue Service P.O. Box 7704 San Francisco, CA 94120-7704

Internal Revenue Service P.O. Box 802501 Cincinnati, OH 45280-2501

Internal Revenue Service P.O. Box 970011 St. Louis, MO 63197-0011

Internal Revenue Service P.O. Box 37008 Hartford, CT 06176-0008

Internal Revenue Service P.O. Box 1303 Charlotte, NC 28201-1303

Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002

Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002 Department of the Treasury Internal Revenue Service Kansas City, MO 64999-0002

Department of the Treasury Internal Revenue Service Fresno, CA 93888-0002

Department of the Treasury Internal Revenue Service Austin, TX 73301-0215

Mail your return to the address shown below that applies to you. If you want to use a private delivery service, see Private Delivery Services under Filing Requirements, earlier.

Envelopes without enough postage will be returned to you by the post office. Your envelope may need additional postage if it contains more than five pages or is oversized (for example, it is over ¼” thick). Also, include your complete return address.