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Tax Topic Index

Tax Topics

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Current Year Tax Map
Publication 17
Your Federal Income Tax (For Individuals)
Introduction, Useful Items and Important Changes
For use in Preparing 2012 Returns

Part 1
The Income Tax Return

Chapter 1
Filing Information

Do I Have To File a Return?

Individuals—In General
Certain Children Under Age 19 or Full-Time Students
Self-Employed Persons
Who Should File

Which Form Should I Use?

Form 1040EZ
Form 1040A
Form 1040

Does My Return Have To Be on Paper?


When Do I Have To File?

Extensions of Time To File

How Do I Prepare My Return?

When Do I Report My Income and Expenses?
Social Security Number (SSN)
Presidential Election Campaign Fund
Third Party Designee
Paid Preparer
Amount You Owe
Gift To Reduce Debt Held by the Public
Name and Address

Where Do I File?

What Happens After I File?

What Records Should I Keep?
Why Keep Records?
Kinds of Records to Keep
Basic Records
How Long to Keep Records
Refund Information
Interest on Refunds
Change of Address

What If I Made a Mistake?

Amended Returns and Claims for Refund
Identity Theft

Chapter 2
Filing Status

Marital Status


Married Filing Jointly

Filing a Joint Return

Married Filing Separately

Special Rules

Head of Household

Considered Unmarried
Keeping Up a Home
Qualifying Person

Qualifying Widow(er) With Dependent Child

Chapter 3
Personal Exemptions and Dependents


Personal Exemptions

Exemptions for Dependents

Qualifying Child
Qualifying Relative

Social Security Numbers for Dependents

Chapter 4
Tax Withholding and Estimated Tax

Tax Withholding for 2013

Salaries and Wages
Taxable Fringe Benefits
Sick Pay
Pensions and Annuities
Gambling Winnings
Unemployment Compensation
Federal Payments
Backup Withholding

Estimated Tax for 2013

Who Does Not Have To Pay Estimated Tax
Who Must Pay Estimated Tax
How To Figure Estimated Tax
When To Pay Estimated Tax
How To Figure Each Payment
How To Pay Estimated Tax

Credit for Withholding and Estimated Tax for 2012

Estimated Tax

Underpayment Penalty for 2012

Part 2

Chapter 5
Wages, Salaries, and Other Earnings

Employee Compensation

Miscellaneous Compensation
Fringe Benefits
Retirement Plan Contributions
Stock Options
Restricted Property

Special Rules for Certain Employees

Members of Religious Orders
Foreign Employer

Sickness and Injury Benefits

Disability Pensions
Long-Term Care Insurance Contracts
Workers' Compensation
Other Sickness and Injury Benefits

Chapter 6
Tip Income

Keeping a Daily Tip Record

Reporting Tips to Your Employer

Reporting Tips on Your Tax Return

Allocated Tips

Chapter 7
Interest Income

General Information

Taxable Interest

U.S. Savings Bonds
Education Savings Bond Program
U.S. Treasury Bills, Notes, and Bonds
Bonds Sold Between Interest Dates
State or Local Government Obligations
Original Issue Discount (OID)

When To Report Interest Income

How To Report Interest Income

Chapter 8
Dividends and Other Distributions

General Information

Ordinary Dividends

Qualified Dividends
Dividends Used to Buy More Stock
Money Market Funds

Capital Gain Distributions

Nondividend Distributions

Liquidating Distributions
Distributions of Stock and Stock Rights

Other Distributions

How To Report Dividend Income

Chapter 9
Rental Income and Expenses

Rental Income

Rental Expenses

Repairs and Improvements
Other Expenses

Property Changed to Rental Use

Renting Part of Property

Not Rented for Profit

Personal Use of Dwelling Unit (Including Vacation Home)

Dividing Expenses
Dwelling Unit Used as a Home
Reporting Income and Deductions


Limits on Rental Losses

At-Risk Rules
Passive Activity Limits

How To Report Rental Income and Expenses

Schedule E (Form 1040)

Chapter 10
Retirement Plans, Pensions, and Annuities

General Information

How To Report

Cost (Investment in the Contract)

Taxation of Periodic Payments

Simplified Method

Taxation of Nonperiodic Payments

Lump-Sum Distributions


Special Additional Taxes

Tax on Early Distributions
Tax on Excess Accumulation

Survivors and Beneficiaries

Chapter 11
Social Security and Equivalent Railroad Retirement Benefits

Are Any of Your Benefits Taxable?

How To Report Your Benefits

How Much Is Taxable?


Deductions Related to Your Benefits

Repayments More Than Gross Benefits

Chapter 12
Other Income


Canceled Debts


Host or Hostess

Life Insurance Proceeds

Endowment Contract Proceeds
Accelerated Death Benefits
Public Safety Officer Killed in the Line of Duty

Partnership Income

S Corporation Income


Itemized Deduction Recoveries

Rents from Personal Property



Unemployment Benefits

Welfare and Other Public Assistance Benefits

Other Income

Part 3
Gains and Losses

Chapter 13
Basis of Property

Cost Basis

Real Property

Adjusted Basis

Increases to Basis
Decreases to Basis

Basis Other Than Cost

Property Received for Services
Taxable Exchanges
Involuntary Conversions
Nontaxable Exchanges
Property Transferred From a Spouse
Property Received as a Gift
Inherited Property
Property Changed From Personal to Business or Rental Use
Stocks and Bonds

Chapter 14
Sale of Property

Sales and Trades

What Is a Sale or Trade?
How To Figure Gain or Loss
Nontaxable Trades
Transfers Between Spouses
Related Party Transactions

Capital Gains and Losses

Capital or Ordinary Gain or Loss
Capital Assets and Noncapital Assets
Holding Period
Nonbusiness Bad Debts
Wash Sales
Rollover of Gain From Publicly Traded Securities

Chapter 15
Selling Your Home

Main Home

Figuring Gain or Loss

Selling Price
Amount Realized
Adjusted Basis
Amount of Gain or Loss
Dispositions Other Than Sales
Determining Basis

Excluding the Gain

Maximum Exclusion
Ownership and Use Tests
Reduced Maximum Exclusion

Business Use or Rental of Home

Reporting the Sale

Special Situations

Recapturing (Paying Back) a Federal Mortgage Subsidy

Chapter 16
Reporting Gains and Losses

Reporting Capital Gains and Losses

Capital Losses
Capital Gain Tax Rates

Part 4
Adjustments to Income

Chapter 17
Individual Retirement Arrangements (IRAs)

Traditional IRAs

Who Can Open a Traditional IRA?
When and How Can a Traditional IRA Be Opened?
How Much Can Be Contributed?
When Can Contributions Be Made?
How Much Can You Deduct?
Nondeductible Contributions
Inherited IRAs
Can You Move Retirement Plan Assets?
When Can You Withdraw or Use IRA Assets?
When Must You Withdraw IRA Assets? (Required Minimum Distributions)
Are Distributions Taxable?
What Acts Result in Penalties or Additional Taxes?

Roth IRAs

What Is a Roth IRA?
When Can a Roth IRA Be Opened?
Can You Contribute to a Roth IRA?
Can You Move Amounts Into a Roth IRA?
Are Distributions Taxable?

Chapter 18

General Rules

Instruments Executed After 1984

How To Deduct Alimony Paid

How To Report Alimony Received

Recapture Rule

Chapter 19
Education- Related Adjustments

Student Loan Interest Deduction

Student Loan Interest Defined
Can You Claim the Deduction
How Much Can You Deduct
How Do You Figure the Deduction

Tuition and Fees Deduction

Can You Claim the Deduction
What Expenses Qualify
Who Is an Eligible Student
Who Can Claim a Dependent's Expenses
How Much Can You Deduct

Educator Expenses

Part 5
Standard Deduction and Itemized Deductions

Chapter 20
Standard Deduction

Standard Deduction Amount

Standard Deduction for Dependents

Who Should Itemize

Chapter 21
Medical and Dental Expenses

What Are Medical Expenses?

What Expenses Can You Include This Year?

How Much of the Expenses Can You Deduct?

Whose Medical Expenses Can You Include?


What Medical Expenses Are Includible?

Insurance Premiums
Meals and Lodging
Disabled Dependent Care Expenses

How Do You Treat Reimbursements?

Insurance Reimbursement

Damages for Personal Injuries

How Do You Figure and Report the Deduction on Your Tax Return?

What Tax Form Do You Use?

Impairment-Related Work Expenses

Health Insurance Costs for Self-Employed Persons

Chapter 22

Tests To Deduct Any Tax

Income Taxes

State and Local Income Taxes
Foreign Income Taxes

General Sales Taxes

Real Estate Taxes

Real Estate-Related Items You Cannot Deduct

Personal Property Taxes

Taxes and Fees You Cannot Deduct

Where To Deduct

Chapter 23
Interest Expense

Home Mortgage Interest

Amount Deductible
Mortgage Insurance Premiums
Form 1098, Mortgage Interest Statement

Investment Interest

Investment Property
Allocation of Interest Expense
Limit on Deduction

Items You Cannot Deduct

Personal Interest

Allocation of Interest

How To Report

Chapter 24

Organizations That Qualify To Receive Deductible Contributions

Types of Qualified Organizations

Contributions You Can Deduct

Contributions From Which You Benefit
Expenses Paid for Student Living With You
Out-of-Pocket Expenses in Giving Services

Contributions You Cannot Deduct

Contributions to Individuals
Contributions to Nonqualified Organizations
Contributions From Which You Benefit
Value of Time or Services
Personal Expenses
Appraisal Fees

Contributions of Property

Determining Fair Market Value
Giving Property That Has Decreased in Value
Giving Property That Has Increased in Value

When To Deduct

Limits on Deductions


Records To Keep

Cash Contributions
Noncash Contributions
Out-of-Pocket Expenses

How To Report

Chapter 25
Nonbusiness Casualty and Theft Losses



Loss on Deposits

Proof of Loss

Figuring a Loss

Decrease in Fair Market Value
Adjusted Basis
Insurance and Other Reimbursements
Single Casualty on Multiple Properties

Deduction Limits

$100 Rule
10% Rule

When To Report Gains and Losses

Disaster Area Loss

How To Report Gains and Losses

Chapter 26
Car Expenses and Other Employee Business Expenses

Travel Expenses

Traveling Away From Home
Tax Home
Temporary Assignment or Job
What Travel Expenses Are Deductible?
Travel in the United States
Travel Outside the United States

Entertainment Expenses

50% Limit
What Entertainment Expenses Are Deductible?
What Entertainment Expenses Are Not Deductible?

Gift Expenses

Transportation Expenses

Car Expenses


How To Prove Expenses
How Long To Keep Records and Receipts

How To Report

Completing Forms 2106 and 2106-EZ
Special Rules

Chapter 27
Tax Benefits for Work-Related Education

Qualifying Work-Related Education

Education Required by Employer or by Law
Education To Maintain or Improve Skills
Education To Meet Minimum Requirements
Education That Qualifies You for a New Trade or Business

What Expenses Can Be Deducted

Transportation Expenses
Travel Expenses
No Double Benefit Allowed


Deducting Business Expenses

Self-Employed Persons
Performing Artists and Fee-Basis Officials
Impairment-Related Work Expenses


Chapter 28
Miscellaneous Deductions

Deductions Subject to the 2% Limit

Unreimbursed Employee Expenses (Line 21)
Tax Preparation Fees (Line 22)
Other Expenses (Line 23)

Deductions Not Subject to the 2% Limit

List of Deductions

Nondeductible Expenses

List of Nondeductible Expenses

Part 6
Figuring Your Taxes and Credits

Chapter 29
How To Figure Your Tax

Figuring Your Tax

Alternative Minimum Tax (AMT)

Tax Figured by IRS

Filing the Return

Chapter 30
Tax on Investment Income of Certain Children

Which Parent's Return To Use

Parents Who Do Not File a Joint Return

Parent's Election To Report Child's Interest and Dividends

Effect of Making the Election
Figuring Child's Income
Figuring Additional Tax
Illustrated Example

Tax for Certain Children Who Have Investment Income of More Than $1,900

Providing Parental Information (Form 8615, lines A–C)
Step 1. Figuring the Child's Net Investment Income (Form 8615, Part I)
Step 2. Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II)
Step 3. Figuring the Child's Tax (Form 8615, Part III)
Illustrated Example

Chapter 31
Child and Dependent Care Credit

Tests To Claim the Credit

Qualifying Person Test
Earned Income Test
Work-Related Expense Test
Joint Return Test
Provider Identification Test

How To Figure the Credit

Figuring Total Work-Related Expenses
Earned Income Limit
Dollar Limit
Amount of Credit

How To Claim the Credit

Employment Taxes for Household Employers

Chapter 32
Credit for the Elderly or the Disabled

Are You Eligible for the Credit?

Qualified Individual
Income Limits

Credit Figured for You

Figuring the Credit Yourself

Step 1. Determine Initial Amount
Step 2. Total Certain Nontaxable Pensions and Benefits
Step 3. Determine Excess Adjusted Gross Income
Step 4. Determine the Total of Steps 2 and 3
Step 5. Determine Your Credit

Chapter 33
Child Tax Credit

Qualifying Child

Amount of Credit

Limits on the Credit

Claiming the Credit

Additional Child Tax Credit

Chapter 34
Education Credits

Who Can Claim an Education Credit

Qualified Education Expenses

No Double Benefit Allowed
Adjustments to Qualified Education Expenses

Chapter 35
Earned Income Credit (EIC)

Do You Qualify for the Credit?

If Improper Claim Made in Prior Year

Part A. Rules for Everyone

Rule 1. Your AGI Must Be Less Than:
Rule 2. You Must Have a Valid Social Security Number (SSN)
Rule 3. Your Filing Status Cannot Be Married Filing Separately
Rule 4. You Must Be a U.S. Citizen or Resident Alien All Year
Rule 5. You Cannot File Form 2555 or Form 2555-EZ
Rule 6. Your Investment Income Must Be $3,200 or Less
Rule 7. You Must Have Earned Income

Part B. Rules If You Have a Qualifying Child

Rule 8. Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests
Rule 9. Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC
Rule 10. You Cannot Be a Qualifying Child of Another Taxpayer

Part C. Rules If You Do Not Have a Qualifying Child

Rule 11. You Must Be at Least Age 25 but Under Age 65
Rule 12. You Cannot Be the Dependent of Another Person
Rule 13. You Cannot Be a Qualifying Child of Another Taxpayer
Rule 14. You Must Have Lived in the United States More Than Half of the Year

Part D. Figuring and Claiming the EIC

Rule 15. Your Earned Income Must Be Less Than:
IRS Will Figure the EIC for You
How To Figure the EIC Yourself


Example 1. John and Janet Smith (Form 1040A)
Example 2. Kelly Green (Form 1040EZ)

Chapter 36
Other Credits

Nonrefundable Credits

Adoption Credit
Alternative Motor Vehicle Credit
Alternative Fuel Vehicle Refueling Property Credit
Credit to Holders of Tax Credit Bonds
Foreign Tax Credit
Mortgage Interest Credit
Nonrefundable Credit for Prior Year Minimum Tax
Plug-in Electric Drive Motor Vehicle Credit
Plug-in Electric Vehicle Credit
Residential Energy Credits
Retirement Savings Contributions Credit (Saver's Credit)

Refundable Credits

Credit for Tax on Undistributed Capital Gain
Health Coverage Tax Credit
Refundable Credit for Prior Year Minimum Tax
Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld
Tax Tables

Your Rights as a Taxpayer

How To Get Tax Help