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1040 Ez Forms 2012

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1040 Ez Forms 2012

1040 ez forms 2012 31. 1040 ez forms 2012   Tax on Unearned Income of Certain Children Table of Contents What's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. 1040 ez forms 2012 Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. 1040 ez forms 2012 Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. 1040 ez forms 2012 Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. 1040 ez forms 2012 . 1040 ez forms 2012  For tax years beginning after December 31, 2012, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). 1040 ez forms 2012 NIIT is a 3. 1040 ez forms 2012 8% tax on the lesser of the net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. 1040 ez forms 2012 Use Form 8960, Net Investment Income Tax, to figure this tax. 1040 ez forms 2012 For more information on NIIT, go to www. 1040 ez forms 2012 irs. 1040 ez forms 2012 gov and enter “Net Investment Income Tax” in the search box. 1040 ez forms 2012 Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. 1040 ez forms 2012 If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. 1040 ez forms 2012 (See Parent's Election To Report Child's Interest and Dividends , later. 1040 ez forms 2012 ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 1040 ez forms 2012 (See Tax for Certain Children Who Have Unearned Income , later. 1040 ez forms 2012 ) For these rules, the term “child” includes a legally adopted child and a stepchild. 1040 ez forms 2012 These rules apply whether or not the child is a dependent. 1040 ez forms 2012 Useful Items - You may want to see: Publication 929 Tax Rules for Children and Dependents Form (and Instructions) 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. 1040 ez forms 2012 The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . 1040 ez forms 2012 Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. 1040 ez forms 2012 Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . 1040 ez forms 2012 Parents are married. 1040 ez forms 2012   If the child's parents file separate returns, use the return of the parent with the greater taxable income. 1040 ez forms 2012 Parents not living together. 1040 ez forms 2012   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. 1040 ez forms 2012 If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. 1040 ez forms 2012   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2. 1040 ez forms 2012 Parents are divorced. 1040 ez forms 2012   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. 1040 ez forms 2012 Custodial parent remarried. 1040 ez forms 2012   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. 1040 ez forms 2012 Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. 1040 ez forms 2012 Do not use the return of the noncustodial parent. 1040 ez forms 2012   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. 1040 ez forms 2012 If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. 1040 ez forms 2012 Parents never married. 1040 ez forms 2012   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. 1040 ez forms 2012 If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. 1040 ez forms 2012 Widowed parent remarried. 1040 ez forms 2012   If a widow or widower remarries, the new spouse is treated as the child's other parent. 1040 ez forms 2012 The rules explained earlier under Custodial parent remarried apply. 1040 ez forms 2012 Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. 1040 ez forms 2012 If you do, your child will not have to file a return. 1040 ez forms 2012 You can make this election only if all the following conditions are met. 1040 ez forms 2012 Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. 1040 ez forms 2012 Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). 1040 ez forms 2012 The child's gross income was less than $10,000. 1040 ez forms 2012 The child is required to file a return unless you make this election. 1040 ez forms 2012 The child does not file a joint return for the year. 1040 ez forms 2012 No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. 1040 ez forms 2012 No federal income tax was taken out of your child's income under the backup withholding rules. 1040 ez forms 2012 You are the parent whose return must be used when applying the special tax rules for children. 1040 ez forms 2012 (See Which Parent's Return To Use , earlier. 1040 ez forms 2012 ) These conditions are also shown in Figure 31-A. 1040 ez forms 2012 Certain January 1 birthdays. 1040 ez forms 2012   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. 1040 ez forms 2012 You cannot make this election for such a child unless the child was a full-time student. 1040 ez forms 2012   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. 1040 ez forms 2012 You cannot make this election for such a child. 1040 ez forms 2012 Full-time student. 1040 ez forms 2012   A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. 1040 ez forms 2012 A school includes a technical, trade, or mechanical school. 1040 ez forms 2012 It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 1040 ez forms 2012 How to make the election. 1040 ez forms 2012   Make the election by attaching Form 8814 to your Form 1040. 1040 ez forms 2012 (If you make this election, you cannot file Form 1040A or Form 1040EZ. 1040 ez forms 2012 ) Attach a separate Form 8814 for each child for whom you make the election. 1040 ez forms 2012 You can make the election for one or more children and not for others. 1040 ez forms 2012 Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. 1040 ez forms 2012 Rate may be higher. 1040 ez forms 2012   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. 1040 ez forms 2012 This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. 1040 ez forms 2012 However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. 1040 ez forms 2012 Deductions you cannot take. 1040 ez forms 2012   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. 1040 ez forms 2012 The additional standard deduction if the child is blind. 1040 ez forms 2012 The deduction for a penalty on an early withdrawal of your child's savings. 1040 ez forms 2012 Itemized deductions (such as your child's investment expenses or charitable contributions). 1040 ez forms 2012 Reduced deductions or credits. 1040 ez forms 2012   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. 1040 ez forms 2012 Deduction for contributions to a traditional individual retirement arrangement (IRA). 1040 ez forms 2012 Deduction for student loan interest. 1040 ez forms 2012 Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. 1040 ez forms 2012 Credit for child and dependent care expenses. 1040 ez forms 2012 Child tax credit. 1040 ez forms 2012 Education tax credits. 1040 ez forms 2012 Earned income credit. 1040 ez forms 2012 Penalty for underpayment of estimated tax. 1040 ez forms 2012   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. 1040 ez forms 2012 If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. 1040 ez forms 2012 See chapter 4 for more information. 1040 ez forms 2012 Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. 1040 ez forms 2012 Only the amount over $2,000 is added to your income. 1040 ez forms 2012 The amount over $2,000 is shown on Form 8814, line 6. 1040 ez forms 2012 Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. 1040 ez forms 2012 Include the amount from Form 8814, line 12, on Form 1040, line 21. 1040 ez forms 2012 Enter “Form 8814” on the dotted line next to line 21. 1040 ez forms 2012 If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040, line 21. 1040 ez forms 2012 Capital gain distributions and qualified dividends. 1040 ez forms 2012   If your child's dividend income included any capital gain distributions, see Capital gain distributions under Figuring Child's Income in Publication 929, Part 2. 1040 ez forms 2012 If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. 1040 ez forms 2012 Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. 1040 ez forms 2012 This tax is added to the tax figured on your income. 1040 ez forms 2012 This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. 1040 ez forms 2012 Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. 1040 ez forms 2012 Check box a on Form 1040, line 44. 1040 ez forms 2012 Figure 31-A. 1040 ez forms 2012 Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. 1040 ez forms 2012 Figure 31–A. 1040 ez forms 2012 Can You Include Your Child's Income On Your Tax Return? Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 1040 ez forms 2012 If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. 1040 ez forms 2012 Attach the completed form to the child's Form 1040 or Form 1040A. 1040 ez forms 2012 When Form 8615 must be filed. 1040 ez forms 2012   Form 8615 must be filed for a child if all of the following statements are true. 1040 ez forms 2012 The child's investment income was more than $2,000. 1040 ez forms 2012 The child is required to file a return for 2013. 1040 ez forms 2012 The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. 1040 ez forms 2012 At least one of the child's parents was alive at the end of 2013. 1040 ez forms 2012 The child does not file a joint return for 2013. 1040 ez forms 2012 These conditions are also shown in  Figure 31-B. 1040 ez forms 2012 Earned income. 1040 ez forms 2012   Earned income includes salaries, wages, tips, and other payments received for personal services performed. 1040 ez forms 2012 It does not include unearned income as defined later in this chapter. 1040 ez forms 2012 Support. 1040 ez forms 2012   Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. 1040 ez forms 2012 To figure your child's support, count support provided by you, your child, and others. 1040 ez forms 2012 However, a scholarship received by your child is not considered support if your child is a full-time student. 1040 ez forms 2012 See chapter 3 for details about support. 1040 ez forms 2012 Certain January 1 birthdays. 1040 ez forms 2012   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. 1040 ez forms 2012 Figure 31-B. 1040 ez forms 2012 Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. 1040 ez forms 2012 Figure 31-B. 1040 ez forms 2012 Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. 1040 ez forms 2012 . 1040 ez forms 2012 . 1040 ez forms 2012 THEN, at the end of 2013, the child is considered to be. 1040 ez forms 2012 . 1040 ez forms 2012 . 1040 ez forms 2012 January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. 1040 ez forms 2012 The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. 1040 ez forms 2012  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. 1040 ez forms 2012  ***Do not use Form 8615 for this child. 1040 ez forms 2012 Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. 1040 ez forms 2012 (If the parents filed a joint return, enter the name and social security number listed first on the joint return. 1040 ez forms 2012 ) On line C, check the box for the parent's filing status. 1040 ez forms 2012 See Which Parent's Return To Use at the beginning of this chapter for information on which parent's return information must be used on Form 8615. 1040 ez forms 2012 Parent with different tax year. 1040 ez forms 2012   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. 1040 ez forms 2012 Parent's return information not known timely. 1040 ez forms 2012   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. 1040 ez forms 2012   You can use any reasonable estimate. 1040 ez forms 2012 This includes using information from last year's return. 1040 ez forms 2012 If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. 1040 ez forms 2012    When you get the correct information, file an amended return on Form 1040X, Amended U. 1040 ez forms 2012 S. 1040 ez forms 2012 Individual Income Tax Return. 1040 ez forms 2012   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. 1040 ez forms 2012 S. 1040 ez forms 2012 Individual Income Tax Return. 1040 ez forms 2012 Extensions are discussed in chapter 1. 1040 ez forms 2012 Step 1. 1040 ez forms 2012 Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. 1040 ez forms 2012 To do that, use Form 8615, Part I. 1040 ez forms 2012 Line 1 (unearned income). 1040 ez forms 2012   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. 1040 ez forms 2012 Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. 1040 ez forms 2012 Form 1040EZ cannot be used if Form 8615 must be filed. 1040 ez forms 2012   If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. 1040 ez forms 2012   However, if the child has: excluded any foreign earned income, deducted either a loss from self-employment, or deducted a net operating loss from another year, then use the Alternate Worksheet for Form 8615, Line 1, in Publication 929 to figure the amount to enter on Form 8615, line 1. 1040 ez forms 2012 Unearned income defined. 1040 ez forms 2012   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. 1040 ez forms 2012 It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, the taxable part of social security and pension payments, and certain distributions from trusts. 1040 ez forms 2012 Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). 1040 ez forms 2012 Nontaxable income. 1040 ez forms 2012   For this purpose, unearned income includes only amounts the child must include in total income. 1040 ez forms 2012 Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. 1040 ez forms 2012 Income from property received as a gift. 1040 ez forms 2012   A child's unearned income includes all income produced by property belonging to the child. 1040 ez forms 2012 This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. 1040 ez forms 2012   A child's unearned income includes income produced by property given as a gift to the child. 1040 ez forms 2012 This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. 1040 ez forms 2012 Example. 1040 ez forms 2012 Amanda Black, age 13, received the following income. 1040 ez forms 2012 Dividends — $800 Wages — $2,100 Taxable interest — $1,200 Tax-exempt interest — $100 Net capital gains — $100 The dividends were qualified dividends on stock given to her by her grandparents. 1040 ez forms 2012 Amanda's unearned income is $2,100. 1040 ez forms 2012 This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). 1040 ez forms 2012 Her wages are earned (not unearned) income because they are received for work actually done. 1040 ez forms 2012 Her tax-exempt interest is not included because it is nontaxable. 1040 ez forms 2012 Trust income. 1040 ez forms 2012   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. 1040 ez forms 2012   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. 1040 ez forms 2012 Line 2 (deductions). 1040 ez forms 2012   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. 1040 ez forms 2012   If the child does itemize deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29, that are directly connected with the production of unearned income entered on line 1, or $2,000. 1040 ez forms 2012 Directly connected. 1040 ez forms 2012   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. 1040 ez forms 2012 These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. 1040 ez forms 2012   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). 1040 ez forms 2012 Only the amount greater than 2% of the child's adjusted gross income can be deducted. 1040 ez forms 2012 See chapter 28 for more information. 1040 ez forms 2012 Example 1. 1040 ez forms 2012 Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2% limit) that are directly connected with his unearned income. 1040 ez forms 2012 His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. 1040 ez forms 2012 Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly connected itemized deductions of $300. 1040 ez forms 2012 Example 2. 1040 ez forms 2012 Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. 1040 ez forms 2012 She has no other income. 1040 ez forms 2012 She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. 1040 ez forms 2012 Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). 1040 ez forms 2012 The amount on line 2 is $2,050. 1040 ez forms 2012 This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. 1040 ez forms 2012 Line 3. 1040 ez forms 2012   Subtract line 2 from line 1 and enter the result on this line. 1040 ez forms 2012 If zero or less, do not complete the rest of the form. 1040 ez forms 2012 However, you must still attach Form 8615 to the child's tax return. 1040 ez forms 2012 Figure the tax on the child's taxable income in the normal manner. 1040 ez forms 2012 Line 4 (child's taxable income). 1040 ez forms 2012   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. 1040 ez forms 2012   However, if the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, see the Form 8615 instructions or Pub. 1040 ez forms 2012 929. 1040 ez forms 2012 Line 5 (net unearned income). 1040 ez forms 2012   A child's net unearned income cannot be more than his or her taxable income. 1040 ez forms 2012 Enter on Form 8615, line 5, the smaller of line 3 or line 4. 1040 ez forms 2012 This is the child's net unearned income. 1040 ez forms 2012   If zero or less, do not complete the rest of the form. 1040 ez forms 2012 However, you must still attach Form 8615 to the child's tax return. 1040 ez forms 2012 Figure the tax on the child's taxable income in the normal manner. 1040 ez forms 2012 Step 2. 1040 ez forms 2012 Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. 1040 ez forms 2012 The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. 1040 ez forms 2012 When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. 1040 ez forms 2012 For example, do not refigure the medical expense deduction. 1040 ez forms 2012 Figure the tentative tax on Form 8615, lines 6 through 13. 1040 ez forms 2012 Note. 1040 ez forms 2012 If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. 1040 ez forms 2012 Line 6 (parent's taxable income). 1040 ez forms 2012   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. 1040 ez forms 2012   If the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) was used to figure the parent's tax, enter the amount from line 3 of that worksheet instead of the parent's taxable income. 1040 ez forms 2012 Line 7 (net unearned income of other children). 1040 ez forms 2012   If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. 1040 ez forms 2012 Do not include the amount from line 5 of the Form 8615 being completed. 1040 ez forms 2012 Example. 1040 ez forms 2012 Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. 1040 ez forms 2012 The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon — $800 Jerry — $600 Mike — $1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. 1040 ez forms 2012 Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). 1040 ez forms 2012 Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). 1040 ez forms 2012 Other children's information not available. 1040 ez forms 2012   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. 1040 ez forms 2012 See Parent's return information not known timely , earlier. 1040 ez forms 2012 Line 11 (tentative tax). 1040 ez forms 2012   Subtract line 10 from line 9 and enter the result on this line. 1040 ez forms 2012 This is the tentative tax. 1040 ez forms 2012   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. 1040 ez forms 2012 Also skip the discussion for lines 12a and 12b that follows. 1040 ez forms 2012 Lines 12a and 12b (dividing the tentative tax). 1040 ez forms 2012   If an amount is entered on line 7, divide the tentative tax shown on line 11 among the children according to each child's share of the total net unearned income. 1040 ez forms 2012 This is done on lines 12a, 12b, and 13. 1040 ez forms 2012 Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. 1040 ez forms 2012 Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. 1040 ez forms 2012 Example. 1040 ez forms 2012 In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. 1040 ez forms 2012 The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). 1040 ez forms 2012 The decimal on line 12b is  . 1040 ez forms 2012 333, figured as follows and rounded to three places. 1040 ez forms 2012   $800 = . 1040 ez forms 2012 333     $2,400   Step 3. 1040 ez forms 2012 Figuring the Child's Tax (Form 8615, Part III) The final step in figuring a child's tax using Form 8615 is to determine the larger of: The total of: The child's share of the tentative tax based on the parent's tax rate, plus The tax on the child's taxable income in excess of net unearned income, figured at the child's tax rate, or The tax on the child's taxable income, figured at the child's tax rate. 1040 ez forms 2012 This is the child's tax. 1040 ez forms 2012 It is figured on Form 8615, lines 14 through 18. 1040 ez forms 2012 Alternative minimum tax. 1040 ez forms 2012   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. 1040 ez forms 2012 See Alternative Minimum Tax (AMT) in chapter 30. 1040 ez forms 2012    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. 1040 ez forms 2012 For information on special limits that apply to a child who files Form 6251, see Certain Children Under Age 24 in the Instructions for Form 6251. 1040 ez forms 2012 Prev  Up  Next   Home   More Online Publications
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The 1040 Ez Forms 2012

1040 ez forms 2012 3. 1040 ez forms 2012   Exclusions From Gross Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Resident AliensForeign Earned Income and Housing Amount Nonresident AliensInterest Income Dividend Income Services Performed for Foreign Employer Gambling Winnings From Dog or Horse Racing Gain From the Sale of Your Main Home Scholarships and Fellowship GrantsExpenses that do not qualify. 1040 ez forms 2012 Introduction Resident and nonresident aliens are allowed exclusions from gross income if they meet certain conditions. 1040 ez forms 2012 An exclusion from gross income is generally income you receive that is not included in your U. 1040 ez forms 2012 S. 1040 ez forms 2012 income and is not subject to U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax. 1040 ez forms 2012 This chapter covers some of the more common exclusions allowed to resident and nonresident aliens. 1040 ez forms 2012 Topics - This chapter discusses: Nontaxable interest, Nontaxable dividends, Certain compensation paid by a foreign employer, Gain from sale of home, and Scholarships and fellowship grants. 1040 ez forms 2012 Useful Items - You may want to see: Publication 54 Tax Guide for U. 1040 ez forms 2012 S. 1040 ez forms 2012 Citizens and Resident Aliens Abroad 523 Selling Your Home See chapter 12 for information about getting these publications. 1040 ez forms 2012 Resident Aliens Resident aliens may be able to exclude the following items from their gross income. 1040 ez forms 2012 Foreign Earned Income and Housing Amount If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. 1040 ez forms 2012 The exclusion is $97,600 in 2013. 1040 ez forms 2012 In addition, you may be able to exclude or deduct certain foreign housing amounts. 1040 ez forms 2012 You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. 1040 ez forms 2012 For more information, see Publication 54. 1040 ez forms 2012 Foreign country. 1040 ez forms 2012    A foreign country is any territory under the sovereignty of a government other than that of the United States. 1040 ez forms 2012   The term “foreign country” includes the country's territorial waters and airspace, but not international waters and the airspace above them. 1040 ez forms 2012 It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. 1040 ez forms 2012   The term “foreign country” does not include U. 1040 ez forms 2012 S. 1040 ez forms 2012 possessions or territories. 1040 ez forms 2012 It does not include the Antarctic region. 1040 ez forms 2012 Nonresident Aliens Nonresident aliens can exclude the following items from their gross income. 1040 ez forms 2012 Interest Income Interest income that is not connected with a U. 1040 ez forms 2012 S. 1040 ez forms 2012 trade or business is excluded from income if it is from: Deposits (including certificates of deposit) with persons in the banking business, Deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law (if the interest paid or credited can be deducted by the association), and Amounts held by an insurance company under an agreement to pay interest on them. 1040 ez forms 2012 State and local government obligations. 1040 ez forms 2012   Interest on obligations of a state or political subdivision, the District of Columbia, or a U. 1040 ez forms 2012 S. 1040 ez forms 2012 possession, generally is not included in income. 1040 ez forms 2012 However, interest on certain private activity bonds, arbitrage bonds, and certain bonds not in registered form is included in income. 1040 ez forms 2012 Portfolio interest. 1040 ez forms 2012   Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. 1040 ez forms 2012 To qualify as portfolio interest, the interest must be paid on obligations issued after July 18, 1984, and otherwise subject to NRA withholding. 1040 ez forms 2012 Note. 1040 ez forms 2012 For obligations issued after March 18, 2012, portfolio interest does not include interest paid on debt that is not in registered form. 1040 ez forms 2012 Before March 19, 2012, portfolio interest included interest on certain registered and nonregistered (bearer) bonds if the obligations meet the requirements described below. 1040 ez forms 2012 Obligations in registered form. 1040 ez forms 2012   Portfolio interest includes interest paid on an obligation that is in registered form, and for which you have received documentation that the beneficial owner of the obligation is not a United States person. 1040 ez forms 2012   Generally, an obligation is in registered form if: (i) the obligation is registered as to both principal and any stated interest with the issuer (or its agent) and any transfer of the obligation may be effected only by surrender of the old obligation and reissuance to the new holder; (ii) the right to principal and stated interest with respect to the obligation may be transferred only through a book entry system maintained by the issuer or its agent; or (iii) the obligation is registered as to both principal and stated interest with the issuer or its agent and can be transferred both by surrender and reissuance and through a book entry system. 1040 ez forms 2012   An obligation that would otherwise be considered to be in registered form is not considered to be in registered form as of a particular time if it can be converted at any time in the future into an obligation that is not in registered form. 1040 ez forms 2012 For more information on whether obligations are considered to be in registered form, see Portfolio interest in Publication 515. 1040 ez forms 2012 Obligations not in registered form. 1040 ez forms 2012    For obligations issued before March 19, 2012, interest on an obligation that is not in registered form (bearer obligation) is portfolio interest if the obligation is foreign-targeted. 1040 ez forms 2012 A bearer obligation is foreign-targeted if: There are arrangements to ensure that the obligation will be sold, or resold in connection with the original issue, only to a person who is not a United States person, Interest on the obligation is payable only outside the United States and its possessions, and The face of the obligation contains a statement that any United States person who holds the obligation will be subject to limits under the United States income tax laws. 1040 ez forms 2012   Documentation is not required for interest on bearer obligations to qualify as portfolio interest. 1040 ez forms 2012 In some cases, however, you may need documentation for purposes of Form 1099 reporting and backup withholding. 1040 ez forms 2012 Interest that does not qualify as portfolio interest. 1040 ez forms 2012   Payments to certain persons and payments of contingent interest do not qualify as portfolio interest. 1040 ez forms 2012 You must withhold at the statutory rate on such payments unless some other exception, such as a treaty provision, applies. 1040 ez forms 2012 Contingent interest. 1040 ez forms 2012   Portfolio interest does not include contingent interest. 1040 ez forms 2012 Contingent interest is either of the following: Interest that is determined by reference to: Any receipts, sales, or other cash flow of the debtor or related person, Income or profits of the debtor or related person, Any change in value of any property of the debtor or a related person, or Any dividend, partnership distributions, or similar payments made by the debtor or a related person. 1040 ez forms 2012 For exceptions, see Internal Revenue Code section 871(h)(4)(C). 1040 ez forms 2012 Any other type of contingent interest that is identified by the Secretary of the Treasury in regulations. 1040 ez forms 2012 Related persons. 1040 ez forms 2012   Related persons include the following. 1040 ez forms 2012 Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 1040 ez forms 2012 ), and lineal descendants (children, grandchildren, etc. 1040 ez forms 2012 ). 1040 ez forms 2012 Any person who is a party to any arrangement undertaken for the purpose of avoiding the contingent interest rules. 1040 ez forms 2012 Certain corporations, partnerships, and other entities. 1040 ez forms 2012 For details, see Nondeductible Loss in chapter 2 of Publication 544. 1040 ez forms 2012 Exception for existing debt. 1040 ez forms 2012   Contingent interest does not include interest paid or accrued on any debt with a fixed term that was issued: On or before April 7, 1993, or After April 7, 1993, pursuant to a written binding contract in effect on that date and at all times thereafter before that debt was issued. 1040 ez forms 2012 Dividend Income The following dividend income is exempt from the 30% tax. 1040 ez forms 2012 Certain dividends paid by foreign corporations. 1040 ez forms 2012   There is no 30% tax on U. 1040 ez forms 2012 S. 1040 ez forms 2012 source dividends you receive from a foreign corporation. 1040 ez forms 2012 See Second exception under Dividends in chapter 2 for how to figure the amount of U. 1040 ez forms 2012 S. 1040 ez forms 2012 source dividends. 1040 ez forms 2012 Certain interest-related dividends. 1040 ez forms 2012   There is no 30% tax on interest-related dividends from sources within the United States that you receive from a mutual fund or other regulated investment company in 2013. 1040 ez forms 2012 The mutual fund will designate in writing which dividends are interest-related dividends. 1040 ez forms 2012 Certain short-term capital gain dividends. 1040 ez forms 2012   There may not be any 30% tax on certain short-term capital gain dividends from sources within the United States that you receive from a mutual fund or other regulated investment company. 1040 ez forms 2012 The mutual fund will designate in writing which dividends are short-term capital gain dividends. 1040 ez forms 2012 This tax relief will not apply to you if you are present in the United States for 183 days or more during your tax year. 1040 ez forms 2012 Services Performed for Foreign Employer If you were paid by a foreign employer, your U. 1040 ez forms 2012 S. 1040 ez forms 2012 source income may be exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax, but only if you meet one of the situations discussed next. 1040 ez forms 2012 Employees of foreign persons, organizations, or offices. 1040 ez forms 2012   Income for personal services performed in the United States as a nonresident alien is not considered to be from U. 1040 ez forms 2012 S. 1040 ez forms 2012 sources and is tax exempt if you meet all three of the following conditions. 1040 ez forms 2012 You perform personal services as an employee of or under a contract with a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in a trade or business in the United States; or you work for an office or place of business maintained in a foreign country or possession of the United States by a U. 1040 ez forms 2012 S. 1040 ez forms 2012 corporation, a U. 1040 ez forms 2012 S. 1040 ez forms 2012 partnership, or a U. 1040 ez forms 2012 S. 1040 ez forms 2012 citizen or resident. 1040 ez forms 2012 You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year. 1040 ez forms 2012 Your pay for these services is not more than $3,000. 1040 ez forms 2012 If you do not meet all three conditions, your income from personal services performed in the United States is U. 1040 ez forms 2012 S. 1040 ez forms 2012 source income and is taxed according to the rules in chapter 4. 1040 ez forms 2012   If your pay for these services is more than $3,000, the entire amount is income from a trade or business within the United States. 1040 ez forms 2012 To find if your pay is more than $3,000, do not include any amounts you get from your employer for advances or reimbursements of business travel expenses, if you were required to and did account to your employer for those expenses. 1040 ez forms 2012 If the advances or reimbursements are more than your expenses, include the excess in your pay for these services. 1040 ez forms 2012   A day means a calendar day during any part of which you are physically present in the United States. 1040 ez forms 2012 Example 1. 1040 ez forms 2012 During 2013, Henry Smythe, a nonresident alien from a nontreaty country, worked for an overseas office of a U. 1040 ez forms 2012 S. 1040 ez forms 2012 partnership. 1040 ez forms 2012 Henry, who uses the calendar year as his tax year, was temporarily present in the United States for 60 days during 2013 performing personal services for the overseas office of the partnership. 1040 ez forms 2012 That office paid him a total gross salary of $2,800 for those services. 1040 ez forms 2012 During 2013, he was not engaged in a trade or business in the United States. 1040 ez forms 2012 The salary is not considered U. 1040 ez forms 2012 S. 1040 ez forms 2012 source income and is exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax. 1040 ez forms 2012 Example 2. 1040 ez forms 2012 The facts are the same as in Example 1, except that Henry's total gross salary for the services performed in the United States during 2013 was $4,500. 1040 ez forms 2012 He received $2,875 in 2013, and $1,625 in 2014. 1040 ez forms 2012 During 2013, he was engaged in a trade or business in the United States because the compensation for his personal services in the United States was more than $3,000. 1040 ez forms 2012 Henry's salary is U. 1040 ez forms 2012 S. 1040 ez forms 2012 source income and is taxed under the rules in chapter 4. 1040 ez forms 2012 Crew members. 1040 ez forms 2012   Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U. 1040 ez forms 2012 S. 1040 ez forms 2012 possession is not U. 1040 ez forms 2012 S. 1040 ez forms 2012 source income and is exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax. 1040 ez forms 2012 This exemption does not apply to compensation for services performed on foreign aircraft. 1040 ez forms 2012 Students and exchange visitors. 1040 ez forms 2012   Nonresident alien students and exchange visitors present in the United States under “F,” “J,” or “Q” visas can exclude from gross income pay received from a foreign employer. 1040 ez forms 2012   This group includes bona fide students, scholars, trainees, teachers, professors, research assistants, specialists, or leaders in a field of specialized knowledge or skill, or persons of similar description. 1040 ez forms 2012 It also includes the alien's spouse and minor children if they come with the alien or come later to join the alien. 1040 ez forms 2012   A nonresident alien temporarily present in the United States under a “J” visa includes an alien individual entering the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. 1040 ez forms 2012 Foreign employer. 1040 ez forms 2012   A foreign employer is: A nonresident alien individual, foreign partnership, or foreign corporation, or An office or place of business maintained in a foreign country or in a U. 1040 ez forms 2012 S. 1040 ez forms 2012 possession by a U. 1040 ez forms 2012 S. 1040 ez forms 2012 corporation, a U. 1040 ez forms 2012 S. 1040 ez forms 2012 partnership, or an individual who is a U. 1040 ez forms 2012 S. 1040 ez forms 2012 citizen or resident. 1040 ez forms 2012   The term “foreign employer” does not include a foreign government. 1040 ez forms 2012 Pay from a foreign government that is exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 income tax is discussed in chapter 10. 1040 ez forms 2012 Income from certain annuities. 1040 ez forms 2012   Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 income tax if you meet both of the following conditions. 1040 ez forms 2012 You receive the annuity only because: You performed personal services outside the United States while you were a nonresident alien, or You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices . 1040 ez forms 2012 At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U. 1040 ez forms 2012 S. 1040 ez forms 2012 citizens or residents. 1040 ez forms 2012   If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if: You are a resident of a country that gives a substantially equal exclusion to U. 1040 ez forms 2012 S. 1040 ez forms 2012 citizens and residents, or You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974. 1040 ez forms 2012   If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment. 1040 ez forms 2012 Income affected by treaties. 1040 ez forms 2012   Income of any kind that is exempt from U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax under a treaty to which the United States is a party is excluded from your gross income. 1040 ez forms 2012 Income on which the tax is only limited by treaty, however, is included in gross income. 1040 ez forms 2012 See chapter 9. 1040 ez forms 2012 Gambling Winnings From Dog or Horse Racing You can exclude from your gross income winnings from legal wagers initiated outside the United States in a parimutuel pool with respect to a live horse or dog race in the United States. 1040 ez forms 2012 Gain From the Sale of Your Main Home If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. 1040 ez forms 2012 If you are married and file a joint return, you may be able to exclude up to $500,000. 1040 ez forms 2012 For information on the requirements for this exclusion, see Publication 523. 1040 ez forms 2012 This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules discussed in chapter 4. 1040 ez forms 2012 Scholarships and Fellowship Grants If you are a candidate for a degree, you may be able to exclude from your income part or all of the amounts you receive as a qualified scholarship. 1040 ez forms 2012 The rules discussed here apply to both resident and nonresident aliens. 1040 ez forms 2012 If a nonresident alien receives a grant that is not from U. 1040 ez forms 2012 S. 1040 ez forms 2012 sources, it is not subject to U. 1040 ez forms 2012 S. 1040 ez forms 2012 tax. 1040 ez forms 2012 See Scholarships, Grants, Prizes, and Awards in chapter 2 to determine whether your grant is from U. 1040 ez forms 2012 S. 1040 ez forms 2012 sources. 1040 ez forms 2012 A scholarship or fellowship is excludable from income only if: You are a candidate for a degree at an eligible educational institution, and You use the scholarship or fellowship to pay qualified education expenses. 1040 ez forms 2012 Candidate for a degree. 1040 ez forms 2012   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. 1040 ez forms 2012 Eligible educational institution. 1040 ez forms 2012   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. 1040 ez forms 2012 Qualified education expenses. 1040 ez forms 2012   These are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. 1040 ez forms 2012 These items must be required of all students in your course of instruction. 1040 ez forms 2012 However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. 1040 ez forms 2012 Expenses that do not qualify. 1040 ez forms 2012   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. 1040 ez forms 2012 This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. 1040 ez forms 2012 Scholarship or fellowship amounts used to pay these costs are taxable. 1040 ez forms 2012 Amounts used to pay expenses that do not qualify. 1040 ez forms 2012   A scholarship amount used to pay any expense that does not qualify is taxable, even if the expense is a fee that must be paid to the institution as a condition of enrollment or attendance. 1040 ez forms 2012 Payment for services. 1040 ez forms 2012   You cannot exclude from income the portion of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. 1040 ez forms 2012 This is true even if all candidates for a degree are required to perform the services as a condition for receiving the degree. 1040 ez forms 2012 Example. 1040 ez forms 2012 On January 7, Maria Gomez is notified of a scholarship of $2,500 for the spring semester. 1040 ez forms 2012 As a condition for receiving the scholarship, Maria must serve as a part-time teaching assistant. 1040 ez forms 2012 Of the $2,500 scholarship, $1,000 represents payment for her services. 1040 ez forms 2012 Assuming that Maria meets all other conditions, she can exclude no more than $1,500 from income as a qualified scholarship. 1040 ez forms 2012 Prev  Up  Next   Home   More Online Publications