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H And R Block 2012 Tax Return

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H And R Block 2012 Tax Return

H and r block 2012 tax return 3. H and r block 2012 tax return   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. H and r block 2012 tax return Other income (nonpassive income). H and r block 2012 tax return Expenses. H and r block 2012 tax return Additional information. H and r block 2012 tax return Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. H and r block 2012 tax return Basis. H and r block 2012 tax return How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. H and r block 2012 tax return Including mutual fund or REMIC expenses in income. H and r block 2012 tax return Nondeductible ExpensesUsed as collateral. H and r block 2012 tax return Short-sale expenses. H and r block 2012 tax return Expenses for both tax-exempt and taxable income. H and r block 2012 tax return State income taxes. H and r block 2012 tax return Nondeductible amount. H and r block 2012 tax return Basis adjustment. H and r block 2012 tax return How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . H and r block 2012 tax return Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. H and r block 2012 tax return Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. H and r block 2012 tax return The at-risk rules and passive activity rules are explained briefly in this section. H and r block 2012 tax return The limit on investment interest is explained later in this chapter under Interest Expenses . H and r block 2012 tax return The 2% limit is explained later in this chapter under Expenses of Producing Income . H and r block 2012 tax return At-risk rules. H and r block 2012 tax return   Special at-risk rules apply to most income-producing activities. H and r block 2012 tax return These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. H and r block 2012 tax return Generally, this is the cash and the adjusted basis of property you contribute to the activity. H and r block 2012 tax return It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. H and r block 2012 tax return For more information, see Publication 925. H and r block 2012 tax return Passive activity losses and credits. H and r block 2012 tax return   The amount of losses and tax credits you can claim from passive activities is limited. H and r block 2012 tax return Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. H and r block 2012 tax return Also, you can use credits from passive activities only against tax on the income from passive activities. H and r block 2012 tax return There are exceptions for certain activities, such as rental real estate activities. H and r block 2012 tax return Passive activity. H and r block 2012 tax return   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. H and r block 2012 tax return However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. H and r block 2012 tax return More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. H and r block 2012 tax return You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. H and r block 2012 tax return  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. H and r block 2012 tax return However, it does not include rental activities or certain activities treated as incidental to holding property for investment. H and r block 2012 tax return   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. H and r block 2012 tax return Other income (nonpassive income). H and r block 2012 tax return    Generally, you can use losses from passive activities only to offset income from passive activities. H and r block 2012 tax return You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. H and r block 2012 tax return Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. H and r block 2012 tax return It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. H and r block 2012 tax return This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. H and r block 2012 tax return   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. H and r block 2012 tax return Expenses. H and r block 2012 tax return   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. H and r block 2012 tax return However, this interest and other expenses may be subject to other limits. H and r block 2012 tax return These limits are explained in the rest of this chapter. H and r block 2012 tax return Additional information. H and r block 2012 tax return   For more information about determining and reporting income and losses from passive activities, see Publication 925. H and r block 2012 tax return Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. H and r block 2012 tax return For information on business interest, see chapter 4 of Publication 535. H and r block 2012 tax return You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. H and r block 2012 tax return Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. H and r block 2012 tax return You can deduct investment interest subject to the limit discussed later. H and r block 2012 tax return However, you cannot deduct interest you incurred to produce tax-exempt income. H and r block 2012 tax return See Tax-exempt income under Nondeductible Expenses, later. H and r block 2012 tax return You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. H and r block 2012 tax return Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. H and r block 2012 tax return Investment property. H and r block 2012 tax return   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. H and r block 2012 tax return It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). H and r block 2012 tax return Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). H and r block 2012 tax return Partners, shareholders, and beneficiaries. H and r block 2012 tax return   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. H and r block 2012 tax return Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. H and r block 2012 tax return Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. H and r block 2012 tax return The allocation is not affected by the use of property that secures the debt. H and r block 2012 tax return Example 1. H and r block 2012 tax return You borrow $10,000 and use $8,000 to buy stock. H and r block 2012 tax return You use the other $2,000 to buy items for your home. H and r block 2012 tax return Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. H and r block 2012 tax return The other 20% is nondeductible personal interest. H and r block 2012 tax return Debt proceeds received in cash. H and r block 2012 tax return   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. H and r block 2012 tax return Debt proceeds deposited in account. H and r block 2012 tax return   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. H and r block 2012 tax return But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. H and r block 2012 tax return Example 2. H and r block 2012 tax return Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. H and r block 2012 tax return You did not buy the household items until June 1. H and r block 2012 tax return You had deposited the $2,000 in the bank. H and r block 2012 tax return You had no other transactions on the bank account until June. H and r block 2012 tax return You did not sell the stock, and you made no principal payments on the debt. H and r block 2012 tax return You paid interest from another account. H and r block 2012 tax return The $8,000 is treated as being used for an investment purpose. H and r block 2012 tax return The $2,000 is treated as being used for an investment purpose for the 3-month period. H and r block 2012 tax return Your total interest expense for 3 months on this debt is investment interest. H and r block 2012 tax return In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. H and r block 2012 tax return Amounts paid within 30 days. H and r block 2012 tax return   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. H and r block 2012 tax return This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. H and r block 2012 tax return   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. H and r block 2012 tax return Payments on debt may require new allocation. H and r block 2012 tax return   As you repay a debt used for more than one purpose, you must reallocate the balance. H and r block 2012 tax return You must first reduce the amount allocated to personal purposes by the repayment. H and r block 2012 tax return You then reallocate the rest of the debt to find what part is for investment purposes. H and r block 2012 tax return Example 3. H and r block 2012 tax return If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. H and r block 2012 tax return The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. H and r block 2012 tax return Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. H and r block 2012 tax return Pass-through entities. H and r block 2012 tax return   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. H and r block 2012 tax return If you contribute to the capital of the entity, you can make the allocation using any reasonable method. H and r block 2012 tax return Additional allocation rules. H and r block 2012 tax return   For more information about allocating interest expense, see chapter 4 of Publication 535. H and r block 2012 tax return When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. H and r block 2012 tax return If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. H and r block 2012 tax return For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. H and r block 2012 tax return Example. H and r block 2012 tax return You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. H and r block 2012 tax return On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. H and r block 2012 tax return If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. H and r block 2012 tax return If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. H and r block 2012 tax return Interest paid in advance. H and r block 2012 tax return   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. H and r block 2012 tax return You can deduct in each year only the interest for that year. H and r block 2012 tax return Interest on margin accounts. H and r block 2012 tax return   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. H and r block 2012 tax return You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. H and r block 2012 tax return Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. H and r block 2012 tax return   You cannot deduct any interest on money borrowed for personal reasons. H and r block 2012 tax return Limit on interest deduction for market discount bonds. H and r block 2012 tax return   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. H and r block 2012 tax return This limit does not apply if you accrue the market discount and include it in your income currently. H and r block 2012 tax return   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. H and r block 2012 tax return Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . H and r block 2012 tax return Interest not deducted due to limit. H and r block 2012 tax return   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. H and r block 2012 tax return Choosing to deduct disallowed interest expense before the year of disposition. H and r block 2012 tax return   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. H and r block 2012 tax return The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. H and r block 2012 tax return Net interest income. H and r block 2012 tax return   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. H and r block 2012 tax return Limit on interest deduction for short-term obligations. H and r block 2012 tax return   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. H and r block 2012 tax return   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). H and r block 2012 tax return The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . H and r block 2012 tax return Interest not deducted due to limit. H and r block 2012 tax return   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. H and r block 2012 tax return Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. H and r block 2012 tax return Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. H and r block 2012 tax return You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. H and r block 2012 tax return The interest carried over is treated as investment interest paid or accrued in that next year. H and r block 2012 tax return You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. H and r block 2012 tax return Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. H and r block 2012 tax return Investment income. H and r block 2012 tax return   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). H and r block 2012 tax return Investment income does not include Alaska Permanent Fund dividends. H and r block 2012 tax return It also does not include qualified dividends or net capital gain unless you choose to include them. H and r block 2012 tax return Choosing to include qualified dividends. H and r block 2012 tax return   Investment income generally does not include qualified dividends, discussed in chapter 1. H and r block 2012 tax return However, you can choose to include all or part of your qualified dividends in investment income. H and r block 2012 tax return   You make this choice by completing Form 4952, line 4g, according to its instructions. H and r block 2012 tax return   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. H and r block 2012 tax return Choosing to include net capital gain. H and r block 2012 tax return    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). H and r block 2012 tax return However, you can choose to include all or part of your net capital gain in investment income. H and r block 2012 tax return   You make this choice by completing Form 4952, line 4g, according to its instructions. H and r block 2012 tax return   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. H and r block 2012 tax return   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. H and r block 2012 tax return    Before making either choice, consider the overall effect on your tax liability. H and r block 2012 tax return Compare your tax if you make one or both of these choices with your tax if you do not. H and r block 2012 tax return Investment income of child reported on parent's return. H and r block 2012 tax return   Investment income includes the part of your child's interest and dividend income you choose to report on your return. H and r block 2012 tax return If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. H and r block 2012 tax return Include it on line 4a of Form 4952. H and r block 2012 tax return Example. H and r block 2012 tax return Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. H and r block 2012 tax return You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. H and r block 2012 tax return Also enter $200 on Form 1040, line 21. H and r block 2012 tax return Your investment income includes this $200. H and r block 2012 tax return Child's qualified dividends. H and r block 2012 tax return   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. H and r block 2012 tax return However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. H and r block 2012 tax return   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). H and r block 2012 tax return Child's Alaska Permanent Fund dividends. H and r block 2012 tax return   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. H and r block 2012 tax return To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. H and r block 2012 tax return Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. H and r block 2012 tax return Subtract the result from the amount on Form 8814, line 12. H and r block 2012 tax return Example. H and r block 2012 tax return Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. H and r block 2012 tax return You choose to report this on your return. H and r block 2012 tax return You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. H and r block 2012 tax return You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. H and r block 2012 tax return You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. H and r block 2012 tax return Child's capital gain distributions. H and r block 2012 tax return   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. H and r block 2012 tax return However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. H and r block 2012 tax return   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). H and r block 2012 tax return Investment expenses. H and r block 2012 tax return   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. H and r block 2012 tax return Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. H and r block 2012 tax return Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. H and r block 2012 tax return See Expenses of Producing Income , later, for a discussion of the 2% limit. H and r block 2012 tax return Losses from passive activities. H and r block 2012 tax return   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). H and r block 2012 tax return See Publication 925 for information about passive activities. H and r block 2012 tax return Example. H and r block 2012 tax return Ted is a partner in a partnership that operates a business. H and r block 2012 tax return However, he does not materially participate in the partnership's business. H and r block 2012 tax return Ted's interest in the partnership is considered a passive activity. H and r block 2012 tax return Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. H and r block 2012 tax return His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. H and r block 2012 tax return His investment interest expense is $8,000. H and r block 2012 tax return Ted also has income from the partnership of $2,000. H and r block 2012 tax return Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. H and r block 2012 tax return His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. H and r block 2012 tax return Form 4952 Use Form 4952 to figure your deduction for investment interest. H and r block 2012 tax return See Form 4952 for more information. H and r block 2012 tax return Exception to use of Form 4952. H and r block 2012 tax return   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. H and r block 2012 tax return Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. H and r block 2012 tax return You do not have any other deductible investment expenses. H and r block 2012 tax return You have no carryover of investment interest expense from 2012. H and r block 2012 tax return   If you meet all of these tests, you can deduct all of your investment interest. H and r block 2012 tax return    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. H and r block 2012 tax return If the bond yields taxable interest, you can choose to amortize the premium. H and r block 2012 tax return This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. H and r block 2012 tax return If you make this choice, you must reduce your basis in the bond by the amortization for the year. H and r block 2012 tax return If the bond yields tax-exempt interest, you must amortize the premium. H and r block 2012 tax return This amortized amount is not deductible in determining taxable income. H and r block 2012 tax return However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. H and r block 2012 tax return Bond premium. H and r block 2012 tax return   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). H and r block 2012 tax return For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. H and r block 2012 tax return Special rules to determine amounts payable on a bond. H and r block 2012 tax return   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. H and r block 2012 tax return 171-3. H and r block 2012 tax return Basis. H and r block 2012 tax return   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. H and r block 2012 tax return However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. H and r block 2012 tax return See Regulations section 1. H and r block 2012 tax return 171-1(e). H and r block 2012 tax return Dealers. H and r block 2012 tax return   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. H and r block 2012 tax return   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. H and r block 2012 tax return How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. H and r block 2012 tax return Constant yield method. H and r block 2012 tax return   Figure the bond premium amortization for each accrual period as follows. H and r block 2012 tax return Step 1: Determine your yield. H and r block 2012 tax return   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. H and r block 2012 tax return Figure the yield as of the date you got the bond. H and r block 2012 tax return It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. H and r block 2012 tax return   If you do not know the yield, consult your broker or tax advisor. H and r block 2012 tax return Databases available to them are likely to show the yield at the date of purchase. H and r block 2012 tax return Step 2: Determine the accrual periods. H and r block 2012 tax return   You can choose the accrual periods to use. H and r block 2012 tax return They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. H and r block 2012 tax return The computation is simplest if accrual periods are the same as the intervals between interest payment dates. H and r block 2012 tax return Step 3: Determine the bond premium for the accrual period. H and r block 2012 tax return   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. H and r block 2012 tax return Then subtract the result from the qualified stated interest for the period. H and r block 2012 tax return   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. H and r block 2012 tax return After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. H and r block 2012 tax return Example. H and r block 2012 tax return On February 1, 2012, you bought a taxable bond for $110,000. H and r block 2012 tax return The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). H and r block 2012 tax return The bond pays qualified stated interest of $10,000 on February 1 of each year. H and r block 2012 tax return Your yield is 8. H and r block 2012 tax return 07439% compounded annually. H and r block 2012 tax return You choose to use annual accrual periods ending on February 1 of each year. H and r block 2012 tax return To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. H and r block 2012 tax return When you subtract the result ($8,881. H and r block 2012 tax return 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. H and r block 2012 tax return 17. H and r block 2012 tax return Special rules to figure amortization. H and r block 2012 tax return   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. H and r block 2012 tax return 171-3. H and r block 2012 tax return Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. H and r block 2012 tax return Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. H and r block 2012 tax return Straight-line method. H and r block 2012 tax return   Under this method, the amount of your bond premium amortization is the same each month. H and r block 2012 tax return Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. H and r block 2012 tax return Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). H and r block 2012 tax return This gives you your bond premium amortization for the year. H and r block 2012 tax return Revenue Ruling 82-10 method. H and r block 2012 tax return   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. H and r block 2012 tax return This method is explained in Revenue Ruling 82-10, 1982-1 C. H and r block 2012 tax return B. H and r block 2012 tax return 46. H and r block 2012 tax return Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. H and r block 2012 tax return You should attach a statement to your return that you are making this choice under section 171. H and r block 2012 tax return See How To Report Amortization, next. H and r block 2012 tax return This choice is binding for the year you make it and for later tax years. H and r block 2012 tax return It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. H and r block 2012 tax return You can change your decision to amortize bond premium only with the written approval of the IRS. H and r block 2012 tax return To request approval, use Form 3115. H and r block 2012 tax return For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. H and r block 2012 tax return You can find Revenue Procedure 2011-14 at www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/irb/2011-04_IRB/ar08. H and r block 2012 tax return html. H and r block 2012 tax return How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. H and r block 2012 tax return Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. H and r block 2012 tax return Under your last entry on line 1, put a subtotal of all interest listed on line 1. H and r block 2012 tax return Below this subtotal, print “ABP Adjustment,” and the total interest you received. H and r block 2012 tax return Subtract this amount from the subtotal, and enter the result on line 2. H and r block 2012 tax return Bond premium amortization more than interest. H and r block 2012 tax return   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. H and r block 2012 tax return    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. H and r block 2012 tax return Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. H and r block 2012 tax return Pre-1998 election to amortize bond premium. H and r block 2012 tax return   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. H and r block 2012 tax return Bonds acquired before October 23, 1986. H and r block 2012 tax return   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. H and r block 2012 tax return Bonds acquired after October 22, 1986, but before 1988. H and r block 2012 tax return    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. H and r block 2012 tax return Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). H and r block 2012 tax return To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. H and r block 2012 tax return The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. H and r block 2012 tax return The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. H and r block 2012 tax return The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. H and r block 2012 tax return For information on how to report expenses of producing income, see How To Report Investment Expenses , later. H and r block 2012 tax return Attorney or accounting fees. H and r block 2012 tax return   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. H and r block 2012 tax return However, in some cases, attorney or accounting fees are part of the basis of property. H and r block 2012 tax return See Basis of Investment Property in chapter 4. H and r block 2012 tax return Automatic investment service and dividend reinvestment plans. H and r block 2012 tax return   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. H and r block 2012 tax return Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. H and r block 2012 tax return Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. H and r block 2012 tax return   A corporation in which you own stock also may have a dividend reinvestment plan. H and r block 2012 tax return This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. H and r block 2012 tax return   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. H and r block 2012 tax return If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. H and r block 2012 tax return Deduct the charges in the year you pay them. H and r block 2012 tax return Clerical help and office rent. H and r block 2012 tax return   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. H and r block 2012 tax return Cost of replacing missing securities. H and r block 2012 tax return   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. H and r block 2012 tax return You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. H and r block 2012 tax return   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. H and r block 2012 tax return Under certain types of insurance policies, you can recover some of the expenses. H and r block 2012 tax return   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. H and r block 2012 tax return If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. H and r block 2012 tax return Fees to collect income. H and r block 2012 tax return   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. H and r block 2012 tax return Fees to buy or sell. H and r block 2012 tax return   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. H and r block 2012 tax return You must add the fee to the cost of the property. H and r block 2012 tax return See Basis of Investment Property in chapter 4. H and r block 2012 tax return    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. H and r block 2012 tax return They can be used only to figure gain or loss from the sale. H and r block 2012 tax return See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. H and r block 2012 tax return Investment counsel and advice. H and r block 2012 tax return   You can deduct fees you pay for counsel and advice about investments that produce taxable income. H and r block 2012 tax return This includes amounts you pay for investment advisory services. H and r block 2012 tax return Safe deposit box rent. H and r block 2012 tax return   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. H and r block 2012 tax return If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. H and r block 2012 tax return See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. H and r block 2012 tax return State and local transfer taxes. H and r block 2012 tax return   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. H and r block 2012 tax return If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. H and r block 2012 tax return If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. H and r block 2012 tax return Trustee's commissions for revocable trust. H and r block 2012 tax return   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. H and r block 2012 tax return However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. H and r block 2012 tax return   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. H and r block 2012 tax return You cannot deduct the entire amount in the year you pay it. H and r block 2012 tax return Investment expenses from pass-through entities. H and r block 2012 tax return   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. H and r block 2012 tax return A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). H and r block 2012 tax return A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). H and r block 2012 tax return Publicly-offered mutual funds are discussed later. H and r block 2012 tax return   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. H and r block 2012 tax return Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). H and r block 2012 tax return   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. H and r block 2012 tax return Including mutual fund or REMIC expenses in income. H and r block 2012 tax return   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. H and r block 2012 tax return You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. H and r block 2012 tax return If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). H and r block 2012 tax return If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. H and r block 2012 tax return If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. H and r block 2012 tax return Publicly-offered mutual funds. H and r block 2012 tax return   Most mutual funds are publicly offered. H and r block 2012 tax return These mutual funds, generally, are traded on an established securities exchange. H and r block 2012 tax return These funds do not pass investment expenses through to you. H and r block 2012 tax return Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. H and r block 2012 tax return As a result, you cannot deduct the expenses on your return. H and r block 2012 tax return   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. H and r block 2012 tax return    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. H and r block 2012 tax return Contact your mutual fund if you are not sure whether it is publicly offered. H and r block 2012 tax return Nondeductible Expenses Some expenses that you incur as an investor are not deductible. H and r block 2012 tax return Stockholders' meetings. H and r block 2012 tax return   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. H and r block 2012 tax return This is true even if your purpose in attending is to get information that would be useful in making further investments. H and r block 2012 tax return Investment-related seminar. H and r block 2012 tax return   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. H and r block 2012 tax return Single-premium life insurance, endowment, and annuity contracts. H and r block 2012 tax return   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. H and r block 2012 tax return Used as collateral. H and r block 2012 tax return   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. H and r block 2012 tax return Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. H and r block 2012 tax return Borrowing on insurance. H and r block 2012 tax return   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. H and r block 2012 tax return This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. H and r block 2012 tax return Tax-exempt income. H and r block 2012 tax return   You cannot deduct expenses you incur to produce tax-exempt income. H and r block 2012 tax return Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. H and r block 2012 tax return Short-sale expenses. H and r block 2012 tax return   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. H and r block 2012 tax return However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. H and r block 2012 tax return Short sales are discussed in Short Sales in chapter 4. H and r block 2012 tax return Expenses for both tax-exempt and taxable income. H and r block 2012 tax return   You may have expenses that are for both tax-exempt and taxable income. H and r block 2012 tax return If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. H and r block 2012 tax return You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. H and r block 2012 tax return   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. H and r block 2012 tax return If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. H and r block 2012 tax return To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. H and r block 2012 tax return Example. H and r block 2012 tax return You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. H and r block 2012 tax return In earning this income, you had $500 of expenses. H and r block 2012 tax return You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. H and r block 2012 tax return 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. H and r block 2012 tax return You cannot deduct $400 (80% of $500) of the expenses. H and r block 2012 tax return You can deduct $100 (the rest of the expenses) because they are for the taxable interest. H and r block 2012 tax return State income taxes. H and r block 2012 tax return   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. H and r block 2012 tax return But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. H and r block 2012 tax return Interest expense and carrying charges on straddles. H and r block 2012 tax return   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. H and r block 2012 tax return The nondeductible interest and carrying charges are added to the basis of the straddle property. H and r block 2012 tax return However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. H and r block 2012 tax return  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. H and r block 2012 tax return   Interest includes any amount you pay or incur in connection with personal property used in a short sale. H and r block 2012 tax return However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. H and r block 2012 tax return   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). H and r block 2012 tax return Nondeductible amount. H and r block 2012 tax return   Figure the nondeductible interest and carrying charges on straddle property as follows. H and r block 2012 tax return Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. H and r block 2012 tax return Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. H and r block 2012 tax return Basis adjustment. H and r block 2012 tax return   Add the nondeductible amount to the basis of your straddle property. H and r block 2012 tax return How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). H and r block 2012 tax return Enter your deductible investment interest expense on Schedule A (Form1040), line 14. H and r block 2012 tax return Include any deductible short sale expenses. H and r block 2012 tax return (See Short Sales in chapter 4 for information on these expenses. H and r block 2012 tax return ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. H and r block 2012 tax return Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. H and r block 2012 tax return List the type and amount of each expense on the dotted lines next to line 23. H and r block 2012 tax return (If necessary, you can show the required information on an attached statement. H and r block 2012 tax return ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. H and r block 2012 tax return When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. H and r block 2012 tax return If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. H and r block 2012 tax return Also see When To Deduct Investment Interest , earlier in this chapter. H and r block 2012 tax return Unpaid expenses owed to related party. H and r block 2012 tax return   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. H and r block 2012 tax return The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. H and r block 2012 tax return If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. H and r block 2012 tax return   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . H and r block 2012 tax return It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. H and r block 2012 tax return   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. H and r block 2012 tax return This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. H and r block 2012 tax return Prev  Up  Next   Home   More Online Publications
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Know Your Options

Airline delays caused by bad weather, traffic control problems, and mechanical repairs are hard to predict. If your flight is canceled, most airlines will rebook you on the earliest flight possible to your destination, at no additional charge. If you're able to find a flight on another airline, ask the first airline to endorse your ticket to the new carrier. This could save you a fare increase, but there is no rule requiring them to do this.

Each airline has its own policies about what it will do for delayed passengers; there are no federal requirements. If your flight is delayed or canceled, ask the airline if it will pay for meals or a phone call. Contrary to what many people believe, airlines are not required to do so.

Tarmac Delays

Under new federal rules, U.S. airlines operating domestic flights must allow passengers to deplane after a tarmac delay of three hours. The only exceptions allowed are for safety or security, or if air traffic control advises the pilot otherwise. Carriers are also required to provided adequate food and drinking water within two hours of being delayed on the tarmac; they must also maintain operable lavatories and, if necessary, provide medical attention.
There are other protections as well, such as prohibiting airlines from scheduling chronically delayed flights. For more information, search for Airline Passenger Protections on the Department of Transportation's website.

Overbooked Flights

Selling more tickets than there are seats is not illegal. Most airlines overbook their flights to compensate for "no-shows." If there are more passengers than seats just before a plane is scheduled to depart, you could be "bumped" or left behind against your will. Whether you are bumped or not may depend on when you officially check-in for your flight, so try to arrive early. The U.S. Department of Transportation requires airlines to ask people to give up their seats voluntarily, in exchange for compensation. Airlines decide what to offer volunteers, such as money, a free trip, food or lodging.

Federal rules protect you if you are "bumped" on most flights within the United States and on outbound international flights. Passengers who are involuntarily bumped are protected under Federal Aviation Administration guidelines. If you volunteer to be bumped, your agreement with the airline that is not regulated and will depend on negotiating at the gate.
The airline must give you a written statement describing your rights, as well as the airline's boarding priority rules and criteria. If the airline is not able to get you to your final destination within one hour of your original arrival time, the airline must pay you an amount equal to 200% of your one-way fare, with a maximum of $650. To receive this payment, you must have a confirmed reservation. You must also meet the airline's deadlines for ticketing and check-in. An airline may offer you a free ticket on a future flight in place of a check, but you have the right to insist on a check.

The H And R Block 2012 Tax Return

H and r block 2012 tax return Publication 509 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. H and r block 2012 tax return Tax questions. H and r block 2012 tax return Background Information for Using the Tax CalendarsElectronic deposit requirement. H and r block 2012 tax return Legal holidays. H and r block 2012 tax return Statewide legal holidays. H and r block 2012 tax return Future Developments For the latest information about developments related to Publication 509, such as legislation enacted after it was published, go to www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/pub509. H and r block 2012 tax return What's New Publication 1518 discontinued after 2013. H and r block 2012 tax return  Publication 1518, IRS Tax Calendar for Small Businesses and Self-Employed, is discontinued after 2013. H and r block 2012 tax return An IRS Tax Calendar and most of the information previously contained in Publication 1518 can be found at www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/taxcalendar. H and r block 2012 tax return Reminders Photographs of missing children. H and r block 2012 tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H and r block 2012 tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H and r block 2012 tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. H and r block 2012 tax return Introduction A tax calendar is a 12-month calendar divided into quarters. H and r block 2012 tax return The calendar gives specific due dates for: Filing tax forms, Paying taxes, and Taking other actions required by federal tax law. H and r block 2012 tax return What does this publication contain?   This publication contains the following. H and r block 2012 tax return A section on how to use the tax calendars. H and r block 2012 tax return Three tax calendars: General Tax Calendar, Employer's Tax Calendar, and Excise Tax Calendar. H and r block 2012 tax return A table showing the semiweekly deposit due dates for payroll taxes for 2014. H and r block 2012 tax return   Most of the due dates discussed in this publication are also included in the IRS Tax Calendar available at www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/taxcalendar. H and r block 2012 tax return Who should use this publication?   Primarily, employers need to use this publication. H and r block 2012 tax return However, the General Tax Calendar has important due dates for all businesses and individuals. H and r block 2012 tax return Anyone who must pay excise taxes may need the Excise Tax Calendar . H and r block 2012 tax return What are the advantages of using a tax calendar?   The following are advantages of using a calendar. H and r block 2012 tax return You do not have to figure the due dates yourself. H and r block 2012 tax return You can file or pay timely and avoid penalties. H and r block 2012 tax return You do not have to adjust the due dates for Saturdays, Sundays, and legal holidays. H and r block 2012 tax return You do not have to adjust the due dates for special banking rules if you use the Employer's Tax Calendar or Excise Tax Calendar . H and r block 2012 tax return Which calendar(s) should I use?   To decide which calendar(s) to use, first look at the General Tax Calendar and highlight the dates that apply to you. H and r block 2012 tax return If you are an employer, also use the Employer's Tax Calendar . H and r block 2012 tax return If you must pay excise taxes, use the Excise Tax Calendar . H and r block 2012 tax return Depending on your situation, you may need to use more than one calendar. H and r block 2012 tax return Table 1. H and r block 2012 tax return Useful Publications IF you are. H and r block 2012 tax return . H and r block 2012 tax return . H and r block 2012 tax return THEN you may need. H and r block 2012 tax return . H and r block 2012 tax return . H and r block 2012 tax return An employer • Publication 15 (Circular E), Employer's Tax Guide. H and r block 2012 tax return  • Publication 15-A, Employer's Supplemental Tax Guide. H and r block 2012 tax return  • Publication 15-B, Employer's Tax Guide to Fringe Benefits. H and r block 2012 tax return  • Publication 926, Household Employer's Tax Guide. H and r block 2012 tax return A farmer • Publication 51 (Circular A), Agricultural Employer's Tax Guide. H and r block 2012 tax return  • Publication 225, Farmer's Tax Guide. H and r block 2012 tax return An individual • Publication 505, Tax Withholding and Estimated Tax. H and r block 2012 tax return Required to pay excise taxes • Publication 510, Excise Taxes. H and r block 2012 tax return What is not in these calendars?   The calendars do not cover the employment or excise tax deposit rules. H and r block 2012 tax return You can find the deposit rules for employment taxes in Publication 15 (Circular E), Employer's Tax Guide. H and r block 2012 tax return The deposit rules for excise taxes are in Publication 510, Excise Taxes, and in the Instructions for Form 720, Quarterly Federal Excise Tax Return. H and r block 2012 tax return In addition, the calendars do not cover filing forms and other requirements for: Estate taxes, Gift taxes, Trusts, Exempt organizations, Certain types of corporations, or Foreign partnerships. H and r block 2012 tax return What other publications and tax forms will I need?   Table 1 lists other publications you may need to order. H and r block 2012 tax return Each calendar lists the forms you may need. H and r block 2012 tax return   See How To Get Tax Help near the end of this publication for information about getting publications and forms. H and r block 2012 tax return Comments and suggestions. H and r block 2012 tax return   We welcome your comments about this publication and your suggestions for future editions. H and r block 2012 tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. H and r block 2012 tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H and r block 2012 tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block 2012 tax return   You can send us comments from www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/formspubs. H and r block 2012 tax return Click on More Information and then click on Comment on Tax Forms and Publications. H and r block 2012 tax return   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our forms and publications. H and r block 2012 tax return Ordering forms and publications. H and r block 2012 tax return   Visit www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. H and r block 2012 tax return Internal Revenue Service 1201 N. H and r block 2012 tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H and r block 2012 tax return   If you have a tax question, check the information available on IRS. H and r block 2012 tax return gov or call 1-800-829-1040. H and r block 2012 tax return We cannot answer tax questions sent to either of the above addresses. H and r block 2012 tax return Background Information for Using the Tax Calendars The following brief explanations may be helpful to you in using the tax calendars. H and r block 2012 tax return IRS e-services make taxes easier. H and r block 2012 tax return   Now more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. H and r block 2012 tax return Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make taxes easier. H and r block 2012 tax return    You can e-file your Form 1040; certain business tax returns such as Forms 1120, 1120S, and 1065; certain employment tax returns such as Forms 940 and 941; certain excise tax returns such as Forms 720, 2290, and 8849; and Form 1099 and other information returns. H and r block 2012 tax return Visit www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/efile for more information. H and r block 2012 tax return You can pay taxes online or by phone using the Electronic Federal Tax Payments System (EFTPS). H and r block 2012 tax return For detailed information about using this free service, see Electronic deposit requirement below. H and r block 2012 tax return   Use these electronic options to make filing and paying taxes easier. H and r block 2012 tax return For more information on electronic payments, visit the IRS website at www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/e-pay. H and r block 2012 tax return Tax deposits. H and r block 2012 tax return   Some taxes can be paid with the return on which they are reported. H and r block 2012 tax return However, in many cases, you have to deposit the tax before the due date for filing the return. H and r block 2012 tax return Tax deposits are figured for periods of time that are shorter than the time period covered by the return. H and r block 2012 tax return See Publication 15 (Circular E) for the employment tax deposit rules. H and r block 2012 tax return For the excise tax deposit rules, see Publication 510 or the Instructions for Form 720. H and r block 2012 tax return    Electronic deposit requirement. H and r block 2012 tax return   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). H and r block 2012 tax return Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). H and r block 2012 tax return EFTPS is a free service provided by the Department of Treasury. H and r block 2012 tax return If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. H and r block 2012 tax return   To get more information or to enroll in EFTPS, call 1-800-555-4477 (business), 1-800-316-6541 (individual), or 1-800-733-4829 (TDD/TTY). H and r block 2012 tax return You can also visit the EFTPS website at www. H and r block 2012 tax return eftps. H and r block 2012 tax return gov. H and r block 2012 tax return Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. H and r block 2012 tax return    If you fail to timely, properly, and in full make your federal tax deposit, you may be subject to a failure-to-deposit penalty. H and r block 2012 tax return For an EFTPS deposit to be on time, you must initiate the deposit by 8 p. H and r block 2012 tax return m. H and r block 2012 tax return Eastern time the day before the date the deposit is due. H and r block 2012 tax return Saturday, Sunday, or legal holiday. H and r block 2012 tax return   Generally, if a due date for performing any act for tax purposes falls on a Saturday, Sunday, or legal holiday, the act is considered to be performed timely if it is performed no later than the next day that is not a Saturday, Sunday, or legal holiday. H and r block 2012 tax return The term legal holiday means any legal holiday in the District of Columbia. H and r block 2012 tax return The calendars provided in this publication make the adjustment for Saturdays, Sundays, and legal holidays. H and r block 2012 tax return But you must make any adjustments for statewide legal holidays, as discussed next. H and r block 2012 tax return An exception to this rule for certain excise taxes is noted later under the Excise Tax Calendar. H and r block 2012 tax return Legal holidays. H and r block 2012 tax return   Legal holidays for 2014 are listed below. H and r block 2012 tax return January 1— New Year's Day January 20— Birthday of Martin Luther King, Jr. H and r block 2012 tax return / Inauguration Day February 17— Washington's Birthday April 16— District of Columbia Emancipation Day May 26— Memorial Day July 4— Independence Day September 1— Labor Day October 13— Columbus Day November 11— Veterans Day November 27— Thanksgiving Day December 25— Christmas Day Statewide legal holidays. H and r block 2012 tax return   A statewide legal holiday delays a due date for filing a return only if the IRS office where you are required to file is located in that state. H and r block 2012 tax return A statewide legal holiday does not delay a due date for making a federal tax deposit. H and r block 2012 tax return Extended due date for Forms 1098, 1099, and W-2 if filed electronically. H and r block 2012 tax return   If you file Forms 1098, 1099, or W-2 electronically, your due date for filing them with the IRS or the Social Security Administration (SSA) will be extended to March 31. H and r block 2012 tax return   For 2014, the due date for giving the recipient these forms is January 31. H and r block 2012 tax return   For information about filing Forms 1098, 1099, or W-2G electronically, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. H and r block 2012 tax return For information about filing Form W-2 electronically with the SSA, visit www. H and r block 2012 tax return ssa. H and r block 2012 tax return gov/employer or call 1-800-772-6270. H and r block 2012 tax return Penalties. H and r block 2012 tax return   Whenever possible, you should take action before the listed due date. H and r block 2012 tax return If you are late, you may have to pay a penalty as well as interest on any overdue taxes. H and r block 2012 tax return   Be sure to follow all the tax laws that apply to you. H and r block 2012 tax return In addition to civil penalties, criminal penalties may be imposed for intentionally not paying taxes, for intentionally filing a false return, or for not filing a required return. H and r block 2012 tax return Use of private delivery services. H and r block 2012 tax return   You can use certain private delivery services designated by the IRS to meet the timely mailing as timely filing/paying rule for tax returns and payments. H and r block 2012 tax return These private delivery services include only the following. H and r block 2012 tax return DHL Express (DHL): DHL Same Day Service. H and r block 2012 tax return Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority, and FedEx International First. H and r block 2012 tax return United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. H and r block 2012 tax return M. H and r block 2012 tax return , UPS Worldwide Express Plus, and UPS Worldwide Express. H and r block 2012 tax return   For the IRS mailing address to use if you are using a private delivery service, go to IRS. H and r block 2012 tax return gov and enter “private delivery service” in the search box. H and r block 2012 tax return   The private delivery service can tell you how to get written proof of the mailing date. H and r block 2012 tax return    The U. H and r block 2012 tax return S. H and r block 2012 tax return Postal Service advises that private delivery services cannot deliver items to P. H and r block 2012 tax return O. H and r block 2012 tax return boxes. H and r block 2012 tax return You must use the U. H and r block 2012 tax return S. H and r block 2012 tax return Postal Service to mail any item to an IRS P. H and r block 2012 tax return O. H and r block 2012 tax return box address. H and r block 2012 tax return Prev  Up  Next   Home   More Online Publications