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 Previous Page: Publication 525 - Taxable and Nontaxable Income - Sickness and Injury Benefits Next Page: Publication 525 - Taxable and Nontaxable Income - RepaymentsUse to find additional instances of index items. |
taxmap/pubs/p525-004.htm#TXMP5c178d9b |
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This section discusses various types of income. You may have taxable income from certain transactions even if no money changes hands. For example, you may have taxable income if you lend money at a below-market interest rate or have a debt you owe canceled.
taxmap/pubs/p525-004.htm#TXMP0934dba6 |
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Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time as to the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise.
Generally, you report this income on Schedule C or Schedule C-EZ (Form 1040). However, if the barter involves an exchange of something other than services, such as in Example 4 below, you may have to use another form or schedule instead.
You are a self-employed attorney who performs legal services for a client, a small corporation. The corporation gives you shares of its stock as payment for your services. You must include the fair market value of the shares in your income on Schedule C or Schedule C-EZ (Form 1040) in the year you receive them.
You are a self-employed accountant. You and a house painter are members of a barter club. Members get in touch with each other directly and bargain for the value of the services to be performed. In return for accounting services you provided, the house painter painted your home. You must report as your income on Schedule C or Schedule C-EZ (Form 1040) the fair market value of the house painting services you received. The house painter must include in income the fair market value of the accounting services you provided.
You are self-employed and a member of a barter club. The club uses credit units as a means of exchange. It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. The club subtracts credit units from your account when you receive goods or services from other members. You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year.
You own a small apartment building. In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. You must report as rental income on Schedule E (Form 1040) the fair market value of the artwork, and the artist must report as income on Schedule C or Schedule C-EZ (Form 1040) the fair rental value of the apartment.
taxmap/pubs/p525-004.htm#TXMP01396f0f |
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If you exchanged property or services through a barter exchange, Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, or a similar statement from the barter exchange should be sent to you by January 31, 2007. It should show the value of cash, property, services, credits, or scrip you received from exchanges during 2006. The IRS also will receive a copy of Form 1099-B.
taxmap/pubs/p525-004.htm#TXMP6608d3fc |
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The income you receive from bartering generally is not subject to regular income tax withholding. However, backup withholding will apply in certain circumstances to ensure that income tax is collected on this income.
Under backup withholding, the barter exchange must withhold, as income tax, 28% of the income if:
 | If tax is withheld from your barter income, the barter exchange will report the amount of tax withheld on Form 1099-B, or similar statement. |
taxmap/pubs/p525-004.htm#TXMP3b98a9bf |
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Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. You have no income from the canceled debt if it is intended as a gift to you. A debt includes any indebtedness for which you are liable or which attaches to property you hold.
If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. If it is a business debt, report the amount on Schedule C or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer).
taxmap/pubs/p525-004.htm#TXMP66c95ea7 |
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If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. The amount of the canceled debt is shown in box 2.
taxmap/pubs/p525-004.htm#TXMP449a373b Interest included in canceled debt. |
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If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of interest also will be shown in box 3. Whether or not you must include the interest portion of the canceled debt in your income depends on whether the interest would be deductible if you paid it. See Deductible debt under Exceptions, later.
If the interest would not be deductible (such as interest on a personal loan), include in your income the amount from Form 1099-C, box 2. If the interest would be deductible (such as on a business loan), include in your income the net amount of the canceled debt (the amount shown in box 2 less the interest amount shown in box 3).
taxmap/pubs/p525-004.htm#TXMP6fbec60b |
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If your financial institution offers a discount for the early payment of your mortgage loan, the amount of the discount is canceled debt. You must include the canceled amount in your income.
taxmap/pubs/p525-004.htm#TXMP2eeac8cd |
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If you are personally liable for a mortgage (recourse debt), and you are relieved of the mortgage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. To the extent the mortgage discharge exceeds the fair market value of the property, it is income from discharge of indebtedness unless it qualifies for exclusion under Excluded debt, later. Report any income from discharge of indebtedness on nonbusiness debt that does not qualify for exclusion as other income on Form 1040, line 21.
If you are not personally liable for a mortgage (nonrecourse debt), and you are relieved of the mortgage when you dispose of the property (such as through foreclosure or repossession), that relief is included in the amount you realize. You may have a taxable gain if the amount you realize exceeds your adjusted basis in the property. Report any gain on nonbusiness property as a capital gain.
See Foreclosures and Repossessions in Publication 544 for more information.
taxmap/pubs/p525-004.htm#TXMP146db6fc |
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If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution that is generally dividend income to you. For more information, see Publication 542, Corporations.
If you are a stockholder in a corporation and you cancel a debt owed to you by the corporation, you generally do not realize income. This is because the canceled debt is considered as a contribution to the capital of the corporation equal to the amount of debt principal that you canceled.
taxmap/pubs/p525-004.htm#TXMP033710b8 |
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If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for refund for the year the amount was included in income. You can file a claim on Form 1040X if the statute of limitations for filing a claim is still open. The statute of limitations generally does not end until 3 years after the due date of your original return.
taxmap/pubs/p525-004.htm#TXMP4411fc99 |
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There are several exceptions to the inclusion of canceled debt in income. These are explained next.
taxmap/pubs/p525-004.htm#TXMP35abd99b |
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If you qualify, you can exclude from income the amount of a canceled nonbusiness debt. The debt must be canceled by an applicable entity after August 24, 2005, and before January 1, 2007.
You qualify for this relief if your main home on August 25, 2005, was located:
This exclusion does not apply to a canceled debt to the extent that real property, which was security for the debt, is located outside of the Hurricane Katrina disaster area.
taxmap/pubs/p525-004.htm#TXMP50e9f811 Applicable entity. |
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The term applicable entity means an executive, judicial, or legislative agency and an applicable financial entity as defined in Internal Revenue Code section 6050P(c).
taxmap/pubs/p525-004.htm#TXMP63876a73 |
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Certain student loans contain a provision that all or part of the debt incurred to attend the qualified educational institution will be canceled if you work for a certain period of time in certain professions for any of a broad class of employers.
You do not have income if your student loan is canceled after you agreed to this provision and then performed the services required. To qualify, the loan must have been made by:
A loan to refinance a qualified student loan also will qualify if it was made by an educational institution or a tax-exempt section 501(a) organization under its program designed as described in (3)(b) above.
An educational institution is an organization with a regular faculty and curriculum and a regularly enrolled body of students in attendance at the place where the educational activities are carried on.
A section 501(c)(3) organization is any corporation, community chest, fund, or foundation organized and operated exclusively for one or more of the following purposes.
taxmap/pubs/p525-004.htm#TXMP36df7670 Exception. |
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You do have income if your student loan was made by an educational institution and is canceled because of services you performed for the institution or other organization that provided the funds.
taxmap/pubs/p525-004.htm#TXMP53db4778 |
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You do not have income from the cancellation of a debt if your payment of the debt would be deductible. This exception applies only if you use the cash method of accounting. For more information, see chapter 5 of Publication 334.
taxmap/pubs/p525-004.htm#TXMP6fc7f748 Education loan repayment assistance. |
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Education loan repayments made to you by the National Health Service Corps Loan Repayment Program (NHSC Loan Repayment Program) or a state education loan repayment program eligible for funds under the Public Health Service Act are not taxable if you agree to provide primary health services in health professional shortage areas. For more information, see Publication 970.
taxmap/pubs/p525-004.htm#TXMP482d9285 |
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Generally, if the seller reduces the amount of debt you owe for property you purchased, you do not have income from the reduction. The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property.
taxmap/pubs/p525-004.htm#TXMP4a0d6550 |
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Do not include a canceled debt in your gross income in the following situations.
taxmap/pubs/p525-004.htm#TXMP0070ae5e |
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If you host a party at which sales are made, any gift you receive for giving the party is a payment for helping a direct seller make sales. You must report it as income at its fair market value.
Your out-of-pocket party expenses are subject to the 50% limit for meal and entertainment expenses. These expenses are deductible as miscellaneous itemized deductions subject to the 2% of AGI limit on Schedule A (Form 1040), but only up to the amount of income you receive for giving the party.
For more information about the 50% limit for meal and entertainment expenses, see 50% Limit in Publication 463.
taxmap/pubs/p525-004.htm#TXMP0a6bf9e4 |
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Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance policy or an endowment contract.
taxmap/pubs/p525-004.htm#TXMP44f63854 |
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If death benefits are paid to you in a lump sum or other than at regular intervals, include in your income only the benefits that are more than the amount payable to you at the time of the insured person's death. If the benefit payable at death is not specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death.
taxmap/pubs/p525-004.htm#TXMP190543f4 |
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If you receive life insurance proceeds in installments, you can exclude part of each installment from your income.
To determine the excluded part, divide the amount held by the insurance company (generally the total lump sum payable at the death of the insured person) by the number of installments to be paid. Include anything over this excluded part in your income as interest.
The face amount of the policy is $75,000 and, as beneficiary, you choose to receive 120 monthly installments of $1,000 each. The excluded part of each installment is $625 ($75,000 ÷ 120), or $7,500 for an entire year. The rest of each payment, $375 a month (or $4,500 for an entire year), is interest income to you.
taxmap/pubs/p525-004.htm#TXMP47eba2c4 Installments for life. |
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If, as the beneficiary under an insurance contract, you are entitled to receive the proceeds in installments for the rest of your life without a refund or period-certain guarantee, you figure the excluded part of each installment by dividing the amount held by the insurance company by your life expectancy. If there is a refund or period-certain guarantee, the amount held by the insurance company for this purpose is reduced by the actuarial value of the guarantee.
taxmap/pubs/p525-004.htm#TXMP12b0762e Surviving spouse. |
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If your spouse died before October 23, 1986, and insurance proceeds paid to you because of the death of your spouse are received in installments, you can exclude up to $1,000 a year of the interest included in the installments. If you remarry, you can continue to take the exclusion.
taxmap/pubs/p525-004.htm#TXMP322e3e6d |
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If you are the policyholder of an employer-owned life insurance contract, you must include in income any life insurance proceeds received that are more than the premiums and any other amounts you paid on the policy. You are subject to this rule if you have a trade or business, you own a life insurance contract on the life of your employee, and you (or a related person) are a beneficiary under the contract.
However, you may exclude the full amount of the life insurance proceeds if the following apply.
taxmap/pubs/p525-004.htm#TXMP3b2b0306 |
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If an insurance company pays you interest only on proceeds from life insurance left on deposit, the interest you are paid is taxable.
If your spouse died before October 23, 1986, and you chose to receive only the interest from your insurance proceeds, the $1,000 interest exclusion for a surviving spouse does not apply. If you later decide to receive the proceeds from the policy in installments, you can take the interest exclusion from the time you begin to receive the installments.
taxmap/pubs/p525-004.htm#TXMP0affb4f0 |
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If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy, less any refunded premiums, rebates, dividends, or unrepaid loans that were not included in your income.
You should receive a Form 1099-R showing the total proceeds and the taxable part. Report these amounts on lines 16a and 16b of Form 1040 or on lines 12a and 12b of Form 1040A.
| For information on when the proceeds are excluded from income, see Accelerated Death Benefits, later. |
taxmap/pubs/p525-004.htm#TXMP4ca433b0 |
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Generally, a split-dollar life insurance arrangement is an arrangement between an owner and a non-owner of a life insurance contract under which either party to the arrangement pays all or part of the premiums, and one of the parties paying the premiums is entitled to recover all or part of those premiums from the proceeds of the contract. There are two mutually exclusive regimes to tax split-dollar life insurance arrangements.
taxmap/pubs/p525-004.htm#TXMP12ff58b0 |
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An endowment contract is a policy under which you are paid a specified amount of money on a certain date unless you die before that date, in which case, the money is paid to your designated beneficiary. Endowment proceeds paid in a lump sum to you at maturity are taxable only if the proceeds are more than the cost of the policy. To determine your cost, subtract any amount that you previously received under the contract and excluded from your income from the total premiums (or other consideration) paid for the contract. Include the part of the lump sum payment that is more than your cost in your income.
Endowment proceeds that you choose to receive in installments instead of a lump-sum payment at the maturity of the policy are taxed as an annuity. This is explained in Publication 575. For this treatment to apply, you must choose to receive the proceeds in installments before receiving any part of the lump sum. This election must be made within 60 days after the lump-sum payment first becomes payable to you.
taxmap/pubs/p525-004.htm#TXMP1deaa089 |
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Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are excluded from income if the insured is terminally or chronically ill.
taxmap/pubs/p525-004.htm#TXMP11dbd36b |
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This is the sale or assignment of any part of the death benefit under a life insurance contract to a viatical settlement provider. A viatical settlement provider is a person who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill and who meets the requirements of section 101(g)(2)(B) of the Internal Revenue Code.
taxmap/pubs/p525-004.htm#TXMP4162946f |
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Accelerated death benefits are fully excludable if the insured is a terminally ill individual. This is a person who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification.
taxmap/pubs/p525-004.htm#TXMP44c80381 |
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If the insured is a chronically ill individual who is not terminally ill, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Accelerated death benefits paid on a per diem or other periodic basis are excludable up to a limit. This limit applies to the total of the accelerated death benefits and any periodic payments received from long-term care insurance contracts. For information on the limit and the definitions of chronically ill individual, qualified long-term care services, and long-term care insurance contracts, see Long-Term Care Insurance Contracts under Sickness and Injury Benefits, earlier.
taxmap/pubs/p525-004.htm#TXMP41aaf4e1 |
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The exclusion does not apply to any amount paid to a person (other than the insured) who has an insurable interest in the life of the insured because the insured:
taxmap/pubs/p525-004.htm#TXMP7da167c0 |
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To claim an exclusion for accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853 with your return. You do not have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred.
taxmap/pubs/p525-004.htm#TXMP6cdb4b56 |
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A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.
taxmap/pubs/p525-004.htm#TXMP6d1358e8 |
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You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.
taxmap/pubs/p525-004.htm#TXMP7fca1390 |
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Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income.
taxmap/pubs/p525-004.htm#TXMP1e955b59 |
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If you received a state or local income tax refund (or credit or offset) in 2006, you generally must include it in income if you deducted the tax in an earlier year. The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2007. The IRS also will receive a copy of the Form 1099-G. Use the worksheet in the 2006 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. See Itemized Deduction Recoveries, later, for when you must use Worksheet 2 on page 22 of this publication.
After 2003, you could choose to deduct for a tax year either:
For 2006, the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year.
taxmap/pubs/p525-004.htm#TXMP77275ff3 Example 1. |
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For 2005 you can choose an $11,000 state income tax deduction or a $10,000 state general sales tax deduction. You choose to deduct the state income tax. In 2006 you receive a $2,500 state income tax refund. The maximum refund that you may have to include in income is $1,000, since you could have deducted $10,000 in state general sales tax.
taxmap/pubs/p525-004.htm#TXMP6e04605d Example 2. |
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For 2005 you can choose an $11,500 state general sales tax deduction based on actual expenses or an $11,200 state income tax deduction. You choose to deduct the general sales tax deduction. In 2006 you return an item you had purchased and receive a $500 sales tax refund. In 2006 you also receive a $1,500 state income tax refund. The maximum refund that you may have to include in income is $500, since it is less than the excess of the tax deducted ($11,500) over the tax you did not choose to deduct ($11,200 - $1,500 = $9,700). Since you did not choose to deduct the state income tax, you do not include the state income tax refund in income.
taxmap/pubs/p525-004.htm#TXMP1dddf51b |
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If you received a refund or credit in 2006 of mortgage interest paid in an earlier year, the amount should be shown in box 3 of your Form 1098, Mortgage Interest Statement. Do not subtract the refund amount from the interest you paid in 2006. You may have to include it in your income under the rules explained in the following discussions.
taxmap/pubs/p525-004.htm#TXMP15210453 |
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Interest on any of the amounts you recover must be reported as interest income in the year received. For example, report any interest you received on state or local income tax refunds on Form 1040, line 8a.
taxmap/pubs/p525-004.htm#TXMP56721de7 |
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If the refund or other recovery and the expense occur in the same year, the recovery reduces the deduction or credit and is not reported as income.
taxmap/pubs/p525-004.htm#TXMP0e0a8e46 |
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If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year.
You paid 2005 estimated state income tax of $4,000 in four equal payments. You made your fourth payment in January 2006. You had no state income tax withheld during 2005. In 2006, you received a $400 tax refund based on your 2005 state income tax return. You claimed itemized deductions each year on your federal income tax return.
You must allocate the $400 refund between 2005 and 2006, the years in which you paid the tax on which the refund is based. You paid 75% ($3,000 ÷ $4,000) of the estimated tax in 2005, so 75% of the $400 refund, or $300, is for amounts you paid in 2005 and is a recovery item. If all of the $300 is a taxable recovery item, you will include $300 on Form 1040, line 10, for 2006, and attach a copy of your computation showing why that amount is less than the amount shown on the Form 1099-G you received from the state.
The balance ($100) of the $400 refund is for your January 2006 estimated tax payment. When you figure your deduction for state and local income taxes paid during 2006, you will reduce the $1,000 paid in January by $100. Your deduction for state and local income taxes paid during 2006 will include the January net amount of $900 ($1,000 − $100), plus any estimated state income taxes paid in 2006 for 2006, and any state income tax withheld during 2006.
taxmap/pubs/p525-004.htm#TXMP09d790ba |
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If you did not itemize deductions for the year for which you received the recovery of an expense that was deductible only if you itemized, do not include any of the recovery amount in your income.
You claimed the standard deduction on your 2005 federal income tax return. In 2006 you received a refund of your 2005 state income tax. Do not report any of the refund as income because you did not itemize deductions for 2005.
taxmap/pubs/p525-004.htm#TXMP2f92325b |
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The following discussion explains how to determine the amount to include in your income from a recovery of an amount deducted in an earlier year as an itemized deduction. However, you generally do not need to use this discussion if the recovery is for state or local income taxes paid in 2005. Instead, use the worksheet in the 2006 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income.
You cannot use the Form 1040 worksheet and must use this discussion if any of the following statements are true.
 | If you also recovered an amount deducted as a non-itemized deduction, figure the amount of that recovery to include in your income and add it to your adjusted gross income before applying the rules explained here. See Non-Itemized Deduction Recoveries, later. |
taxmap/pubs/p525-004.htm#TXMP0f771666 |
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If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you generally must include the full amount of the recovery in your income in the year you receive it. This rule applies if, for the earlier year, all of the following statements are true.
If any of the above statements is not true, see Total recovery not included in income, later.
taxmap/pubs/p525-004.htm#TXMP13370a49 State tax refund. |
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In addition to the previous six items, you must include in your income the full amount of a refund of state or local income tax or general sales tax if the excess of the tax you deducted over the tax you did not deduct is more than the refund of the tax deducted.
If the refund is more than the excess, see Total recovery not included in income, later.
taxmap/pubs/p525-004.htm#TXMP1ed9dde4 Where to report. |
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Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. You cannot use Form 1040A or Form 1040EZ.
For 2005, you filed a joint return. Your taxable income was $60,000 and you were not entitled to any tax credits. Your standard deduction was $10,000, and you had itemized deductions of $11,000. In 2006, you received the following recoveries for amounts deducted on your 2005 return:
| Medical expenses | $200 |
| State and local income tax refund | 400 |
| Refund of mortgage interest | 325 |
| Total recoveries | $925 |
None of the recoveries were more than the deductions taken for 2005. The difference between the state and local income tax you deducted and your local general sales tax was more than $400.
Your total recoveries are less than the amount by which your itemized deductions exceeded the standard deduction ($11,000 − $10,000 = $1,000), so you must include your total recoveries in your income for 2006. Report the state and local income tax refund of $400 on Form 1040, line 10, and the balance of your recoveries, $525, on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP26cc348c |
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If one or more of the six statements listed in the preceding discussion is not true, you may be able to exclude at least part of the recovery from your income. If statements (4), (5), and (6) are true (your itemized deductions were not limited, you had no unused tax credits, and you were not subject to the alternative minimum tax), you can use Worksheet 2 to determine the part of your recovery to include in your income. You also can use Worksheet 2 to determine the part of a state tax refund (discussed earlier) to include in income.
taxmap/pubs/p525-004.htm#TXMP151752d9 Allocating the included part. |
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If you are not required to include all of your recoveries in your income, and you have both a state income tax refund and other itemized deduction recoveries, you must allocate the taxable recoveries between the state income tax refund you report on Form 1040, line 10, and the amount you report as other income on Form 1040, line 21. If you do not use Worksheet 2, make the allocation as follows.
In 2006 you recovered $2,500 of your 2005 itemized deductions, but the recoveries you must include in your 2006 income are only $1,500. Of the $2,500 you recovered, $500 was due to your state income tax refund. Your state income tax was more than your state general sales tax by $600. The amount you report as a state tax refund on Form 1040, line 10, is $300 [($500 ÷ $2,500) × $1,500]. The balance of the taxable recoveries, $1,200, is reported as other income on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP1360c335 |
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You generally are allowed to claim the standard deduction if you do not itemize your deductions. Only your itemized deductions that are more than your standard deduction are subject to the recovery rule (unless you are required to itemize your deductions). If your total deductions on the earlier year return were not more than your income for that year, include in your income this year the lesser of:
Table 2. 2005 Standard Deduction Tables
Table I. Standard Deduction Chart for Most People*
Table II. Standard Deduction Chart for People Who Were Born Before January 2, 1941, or Were Blind*
Table III. Standard Deduction Worksheet for Dependents*
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Table 4. 2003 Standard Deduction Tables
Table I. Standard Deduction Chart for Most People*
Table II. Standard Deduction Chart for People Who Were Born Before January 2, 1939, or Were Blind*
Table III. Standard Deduction Worksheet for Dependents*
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Worksheet 2. Recoveries of Itemized Deductions
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Table 3. 2004 Standard Deduction Tables
Table I. Standard Deduction Chart for Most People*
Table II. Standard Deduction Chart for People Who Were Born Before January 2, 1940, or Were Blind*
Table III. Standard Deduction Worksheet for Dependents*
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taxmap/pubs/p525-004.htm#TXMP72ae9959 Standard deduction for earlier years. |
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To determine if amounts recovered in 2006 must be included in your income, you must know the standard deduction for your filing status for the year the deduction was claimed. The standard deduction tables for 2005, 2004, and 2003 are shown in Tables 2, 3, and 4. If you need the standard deduction amounts for years before 2003, see the copy of your return for that year.
You filed a joint return for 2005 with taxable income of $45,000. Your itemized deductions were $10,350. The standard deduction that you could have claimed was $10,000. In 2006, you recovered $2,100 of your 2005 itemized deductions. None of the recoveries were more than the actual deductions for 2005. Include $350 of the recoveries in your 2006 income. This is the smaller of your recoveries ($2,100) or the amount by which your itemized deductions were more than the standard deduction ($10,350 − $10,000 = $350).
taxmap/pubs/p525-004.htm#TXMP1855139c |
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If your taxable income was a negative amount, reduce the recovery you must otherwise include in your income by the negative amount. For example, line 42 was more than line 41 on your 2005 Form 1040.
The facts are the same as in the previous example except line 42 was $200 more than line 41 on your 2005 Form 1040 giving you a negative taxable income of $200. You must include $150 in your 2006 income, rather than $350.
taxmap/pubs/p525-004.htm#TXMP0797f5eb |
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You do not include in your income any amount of your recovery that is more than the amount you deducted in the earlier year. The amount you include in your income is limited to the smaller of:
During 2005, you paid $1,700 for medical expenses. From this amount you subtracted $1,500, which was 7.5% of your adjusted gross income. Your actual medical expense deduction was $200. In 2006, you received a $500 reimbursement from your medical insurance for your 2005 expenses. The only amount of the $500 reimbursement that must be included in your income for 2006 is $200—the amount actually deducted.
taxmap/pubs/p525-004.htm#TXMP196804db |
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You were subject to the limit on itemized deductions in the earlier year if your adjusted gross income (AGI) was more than a base amount. For example, this amount was:
If the amount you recovered was deducted in a year in which your itemized deductions were limited, you must include it in income up to the difference between the amount of itemized deductions actually allowed that year and the amount you would have been allowed (the greater of your itemized deductions or your standard deduction) if you had figured your deductions using only the net amount of the recovery item.
To determine the part of the recovery you must include in income, follow the two steps below.
If you had unused tax credits in the earlier year, see Unused tax credits on page 26.
For more information on this computation, see Revenue Ruling 93-75. This ruling is in Cumulative Bulletin 1993-2.
Eileen Martin is single. She had an AGI of $1,145,950 and itemized her deductions on her federal income tax return for 2005. She was not subject to alternative minimum tax and was not entitled to any credit against income tax. Her only allowable deduction was $40,000 of state income taxes. Her state general sales tax was $20,000. Eileen deducted only $10,000 of her state income taxes in 2005 because her otherwise allowable deductions of $40,000 were reduced by $30,000. In 2006, she received a $5,000 refund of her state income taxes for 2005.
The following shows how Eileen figured the $30,000 reduction and other amounts from the Itemized Deduction Worksheet in the 2005 Schedule A (Form 1040) instructions. These amounts are needed to figure the part of the $5,000 refund that Eileen must include in her income for 2006.
| AGI for 2005 | $1,145,950 |
| State income taxes paid in 2005 | $40,000 |
| 3% reduction (amount on 2005 Itemized Deduction Worksheet, line 8), [($1,145,950 − $145,950) × 3%] | $30,000 |
| 80% reduction not applied (amount on 2005 Itemized Deduction Worksheet, line 4) ($40,000 × 80%) | $32,000 |
| 2005 deduction (amount on 2005 Itemized Deduction Worksheet, line 10) ($40,000 − $30,000) | $10,000 |
| Refund received in 2006 of 2005 state income tax | $5,000 |
| Net amount of 2005 state income tax ($40,000 − $5,000) | $35,000 |
If Eileen had used the $35,000 net amount of state income tax to figure her itemized deductions for 2005, the deduction allowed would have been $7,000. This is her otherwise allowable deduction of $35,000 reduced by $28,000 ($35,000 × 80%). By deducting the full $10,000 paid in 2005, she derived a tax benefit of $3,000 ($10,000 − $7,000). Therefore, only $3,000 of the $5,000 refund is included in her income for 2006.
taxmap/pubs/p525-004.htm#TXMP0f4604d9 |
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If you recover an item deducted in an earlier year in which you had unused tax credits, you must refigure the earlier year's tax to determine if you must include the recovery in your income. To do this, add the amount of the recovery to your earlier year's taxable income and refigure the tax and the credits on the recomputed amount. If the recomputed tax, after application of the credits, is more than the actual tax in the earlier year, include the recovery in your income up to the amount of the deduction that reduced the tax in the earlier year. For this purpose, any increase to a credit carried over to the current year that resulted from deducting the recovered amount in the earlier year is considered to have reduced your tax in the earlier year. If the recovery is for an itemized deduction claimed in a year in which the deductions were limited, see Itemized deductions limited, earlier.
If your tax, after application of the credits, does not change, you did not have a tax benefit from the deduction. Do not include the recovery in your income.
In 2005, Jean Black filed as head of household and itemized her deductions. Her taxable income was $5,260 and her tax was $528. She claimed a child care credit of $1,200. The credit reduced her tax to zero and she had an unused tax credit of $672 ($1,200 − $528). In 2006, Jean recovered $1,000 of her itemized deductions. She reduces her 2005 itemized deductions by $1,000 and recomputes that year's tax on taxable income of $6,260. However, the child care credit exceeds the recomputed tax of $628. Jean's tax liability for 2005 is not changed by reducing her deductions by the recovery. She did not have a tax benefit from the recovered deduction and does not include any of the recovery in her income for 2006.
taxmap/pubs/p525-004.htm#TXMP4c35a922 |
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If you were subject to the alternative minimum tax in the year of the deduction, you will have to recompute your tax for the earlier year to determine if the recovery must be included in your income. This will require a recomputation of your regular tax, as shown in the preceding example, and a recomputation of your alternative minimum tax. If inclusion of the recovery does not change your total tax, you do not include the recovery in your income. However, if your total tax increases by any amount, you received a tax benefit from the deduction and you must include the recovery in your income up to the amount of the deduction that reduced your tax in the earlier year.
taxmap/pubs/p525-004.htm#TXMP668d9cdd |
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This section discusses recovery of deductions other than those deducted on Schedule A (Form 1040).
taxmap/pubs/p525-004.htm#TXMP7e48ac98 |
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If you recover an amount that you deducted in an earlier year in figuring your adjusted gross income, you generally must include the full amount of the recovery in your income in the year received.
taxmap/pubs/p525-004.htm#TXMP4b4dbffb |
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If any part of the deduction you took for the recovered amount did not reduce your tax, you may be able to exclude at least part of the recovery from your income. You must include the recovery in your income only up to the amount of the deduction that reduced your tax in the year of the deduction. (See Tax benefit rule, earlier.)
taxmap/pubs/p525-004.htm#TXMP6ce50853 |
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If your taxable income was a negative amount, reduce the recovery by that negative amount. For example, line 42 was more than line 41 on your 2005 Form 1040. Include this reduced recovery in your income.
taxmap/pubs/p525-004.htm#TXMP0e404595 |
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If you recover an item deducted in an earlier year in which you had unused tax credits, you must refigure the earlier year's tax to determine if you must include the recovery in your income. To do this, add the amount of the recovery to your earlier year's taxable income and refigure the tax and the credits on the recomputed amount. If the recomputed tax, after application of the credits, is more than the actual tax in the earlier year, include the recovery in your income up to the amount of the deduction that reduced the tax in the earlier year. For this purpose, any increase to a credit carried over to the current year that resulted from deducting the recovered amount in the earlier year is considered to have reduced your tax in the earlier year.
If your tax, after application of the credits, does not change, you did not have a tax benefit from the deduction. Do not include the recovery in your income.
taxmap/pubs/p525-004.htm#TXMP3cbfbde4 |
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If you received a recovery in 2006 for an item for which you claimed a tax credit in an earlier year, you must increase your 2006 tax by the amount of the recovery, up to the amount by which the credit reduced your tax in the earlier year. You had a recovery if there was a downward price adjustment or similar adjustment on the item for which you claimed a credit.
This rule does not apply to the investment credit or the foreign tax credit. Recoveries of these credits are covered by other provisions of the law. See Publication 514, Foreign Tax Credit for Individuals, or Form 4255, Recapture of Investment Credit, for details.
taxmap/pubs/p525-004.htm#TXMP7229e9cd |
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Generally, payments made by or for an employer because of an employee's death must be included in income. The following discussions explain the tax treatment of certain payments made to survivors. For additional information, see Publication 559.
taxmap/pubs/p525-004.htm#TXMP5256a519 |
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Lump-sum payments you receive from a decedent's employer as the surviving spouse or beneficiary may be accrued salary payments; distributions from employee profit-sharing, pension, annuity, or stock bonus plans; or other items that should be treated separately for tax purposes. The tax treatment of these lump-sum payments depends on the type of payment.
taxmap/pubs/p525-004.htm#TXMP0c39971e Salary or wages. |
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Salary or wages received after the death of the employee are usually ordinary income to you.
taxmap/pubs/p525-004.htm#TXMP14b13d19 Qualified employee retirement plans. |
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Lump-sum distributions from qualified employee retirement plans are subject to special tax treatment. For information on these distributions, see Publication 575 (or Publication 721, if you are the survivor of a federal employee or retiree).
taxmap/pubs/p525-004.htm#TXMP5cbec34a |
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If you are a survivor of a public safety officer who was killed in the line of duty, you may be able to exclude from income certain amounts you receive. For this purpose, the term public safety officer includes law enforcement officers, firefighters, chaplains, and rescue squad and ambulance crew members. For more information, see Publication 559.
taxmap/pubs/p525-004.htm#TXMP2715504a |
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The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits.
taxmap/pubs/p525-004.htm#TXMP6aaf5356 |
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You must include in your income all unemployment compensation you receive. You should receive a Form 1099-G showing the amount paid to you. Generally, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ.
taxmap/pubs/p525-004.htm#TXMP50832ae6 Types of unemployment compensation. |
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Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. It includes the following benefits.
taxmap/pubs/p525-004.htm#TXMP04fca69b Governmental program. |
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If you contribute to a governmental unemployment compensation program and your contributions are not deductible, amounts you receive under the program are not included as unemployment compensation until you recover your contributions.
taxmap/pubs/p525-004.htm#TXMP7e7f7fa2 Repayment of unemployment compensation. |
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If you repaid in 2006 unemployment compensation you received in 2006, subtract the amount you repaid from the total amount you received and enter the difference on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. On the dotted line next to your entry, enter "Repaid" and the amount you repaid. If you repaid unemployment compensation in 2006 that you included in your income in an earlier year, you can deduct the amount repaid on Schedule A (Form 1040), line 22, if you itemize deductions. If the amount is more than $3,000, see Repayments, later.
taxmap/pubs/p525-004.htm#TXMP30e376ce Tax withholding. |
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You can choose to have federal income tax withheld from your unemployment compensation. To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Tax will be withheld at 10% of your payment.
| If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax. For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. |
taxmap/pubs/p525-004.htm#TXMP0b4cf78a |
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Benefits received from an employer-financed fund (to which the employees did not contribute) are not unemployment compensation. They are taxable as wages and are subject to withholding for income tax. They may be subject to social security and Medicare taxes. For more information, see Supplemental Unemployment Benefits in Publication 15-A, section 5, Employer's Supplemental Tax Guide. Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ.
taxmap/pubs/p525-004.htm#TXMP5bb72a91 Repayment of benefits. |
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You may have to repay some of your supplemental unemployment benefits to qualify for trade readjustment allowances under the Trade Act of 1974. If you repay supplemental unemployment benefits in the same year you receive them, reduce the total benefits by the amount you repay. If you repay the benefits in a later year, you must include the full amount of the benefits in your income for the year you received them.
Deduct the repayment in the later year as an adjustment to gross income on Form 1040. (You cannot use Form 1040A or Form 1040EZ.) Include the repayment on Form 1040, line 36, and enter "Sub-Pay TRA" and the amount on the dotted line next to line 36. If the amount you repay in a later year is more than $3,000, you may be able to take a credit against your tax for the later year instead of deducting the amount repaid. For information on this, see Repayments, later.
taxmap/pubs/p525-004.htm#TXMP31a1b348 |
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Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. Report the taxable amount on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP7312de11 |
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Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Form 1040, line 21. However, if you contribute to a special union fund and your payments to the fund are not deductible, the unemployment benefits you receive from the fund are includible in your income only to the extent they are more than your contributions.
taxmap/pubs/p525-004.htm#TXMP4712286b |
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Payments you receive from your employer during periods of unemployment, under a union agreement that guarantees you full pay during the year, are taxable as wages. Include them on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ.
taxmap/pubs/p525-004.htm#TXMP6375a34a |
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Payments similar to a state's unemployment compensation may be made by the state to its employees who are not covered by the state's unemployment compensation law. Although the payments are fully taxable, do not report them as unemployment compensation. Report these payments on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP2d1e62d1 |
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Do not include in your income governmental benefit payments from a public welfare fund based upon need, such as payments due to blindness. Payments from a state fund for the victims of crime should not be included in the victims' incomes if they are in the nature of welfare payments. Do not deduct medical expenses that are reimbursed by such a fund. You must include in your income any welfare payments that are compensation for services or that are obtained fraudulently.
taxmap/pubs/p525-004.htm#TXMP31ae4bde |
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Payments you receive from a state welfare agency for taking part in a work-training program are not included in your income, as long as the payments (exclusive of extra allowances for transportation or other costs) do not total more than the public welfare benefits you would have received otherwise. If the payments are more than the welfare benefits you would have received, the entire amount must be included in your income as wages.
taxmap/pubs/p525-004.htm#TXMP1354c7d0 Alternative trade adjustment assistance (ATAA) payments. |
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Payments you receive from a state agency under the Demonstration Project for Alternative Trade Adjustment Assistance for Older Workers (ATAA) must be included in your income. The state must send you Form 1099-G to advise you of the amount you should include in income. The amount should be reported on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP3c18cf3c |
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If you have a disability, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. However, you do not include in income the value of goods, services, and cash that you receive, not in return for your services, but for your training and rehabilitation because you have a disability. Excludable amounts include payments for transportation and attendant care, such as interpreter services for the deaf, reader services for the blind, and services to help mentally retarded persons do their work.
taxmap/pubs/p525-004.htm#TXMP438ecf95 |
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Do not include post-disaster grants received under the Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Do not deduct casualty losses or medical expenses that are specifically reimbursed by these disaster relief grants. Unemployment assistance payments under the Act are taxable unemployment compensation. See Unemployment compensation under Unemployment Benefits, earlier.
taxmap/pubs/p525-004.htm#TXMP17e70b6c |
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You can exclude from income any amount you receive that is a qualified disaster relief payment. A qualified disaster relief payment is an amount paid to you:
A qualified disaster is:
For amounts paid under item (4), a disaster is qualified if it is determined by an applicable federal, state, or local authority to warrant assistance from the federal, state, or local government, agency, or instrumentality.
taxmap/pubs/p525-004.htm#TXMP0178d39e Disaster mitigation payments. |
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You also can exclude from income any amount you receive that is a qualified disaster mitigation payment. Like qualified disaster relief payments, qualified disaster mitigation payments are also most commonly paid to you in the period immediately following damage to property as a result of a natural disaster. However, disaster mitigation payments are grants you use to mitigate (reduce the severity of) potential damage from future natural disasters. They are paid to you through state and local governments based on the provisions of the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act.
You cannot increase the basis or adjusted basis of your property for improvements made with nontaxable disaster mitigation payments.
If in a previous year you filed a tax return reporting disaster mitigation payments as taxable income, you should file Form 1040X to claim a refund for tax years that are not closed by the statute of limitations. The statute of limitations generally does not end until 3 years after the due date of your original return.
taxmap/pubs/p525-004.htm#TXMP4fd5e565 |
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Payments made under section 235 of the National Housing Act for mortgage assistance are not included in the homeowner's income. Interest paid for the homeowner under the mortgage assistance program cannot be deducted.
taxmap/pubs/p525-004.htm#TXMP2dcad846 |
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Replacement housing payments made under the Uniform Relocation Assistance and Real Property Acquisition Policies Act for Federal and Federally Assisted Programs are not includible in gross income, but are includible in the basis of the newly acquired property.
taxmap/pubs/p525-004.htm#TXMP18bda2df |
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A relocation payment under section 105(a)(11) of the Housing and Community Development Act made by a local jurisdiction to a displaced individual moving from a flood-damaged residence to another residence is not includible in gross income. Home rehabilitation grants received by low-income homeowners in a defined area under the same act are also not includible in gross income.
taxmap/pubs/p525-004.htm#TXMP4c0e391a |
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Nonreimbursable grants under title IV of the Indian Financing Act of 1974 to Indians to expand profit-making Indian-owned economic enterprises on or near reservations are not includible in gross income.
taxmap/pubs/p525-004.htm#TXMP27153c7d |
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Medicare benefits received under title XVIII of the Social Security Act are not includible in the gross income of the individuals for whom they are paid. This includes basic (part A (Hospital Insurance Benefits for the Aged)) and supplementary (part B (Supplementary Medical Insurance Benefits for the Aged)).
taxmap/pubs/p525-004.htm#TXMP711e1c0a |
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OASDI payments under section 202 of title II of the Social Security Act are not includible in the gross income of the individuals to whom they are paid. This applies to old-age insurance benefits, and insurance benefits for wives, husbands, children, widows, widowers, mothers and fathers, and parents, as well as the lump-sum death payment.
taxmap/pubs/p525-004.htm#TXMP330d88c1 |
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Food benefits you receive under the Nutrition Program for the Elderly are not taxable. If you prepare and serve free meals for the program, include in your income as wages the cash pay you receive, even if you are also eligible for food benefits.
taxmap/pubs/p525-004.htm#TXMP5fee8013 |
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Payments made by a state to qualified people to reduce their cost of winter energy use are not taxable.
taxmap/pubs/p525-004.htm#TXMP4f0f6031 |
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The following brief discussions are arranged in alphabetical order. Income items that are discussed in greater detail in another publication include a reference to that publication.
taxmap/pubs/p525-004.htm#TXMP419f9219 |
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You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Form 1040, line 21. Deductions for expenses related to the activity are limited. They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit.
taxmap/pubs/p525-004.htm#TXMP6846fa34 |
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If you received a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on line 21 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. The state of Alaska sends each recipient a document that shows the amount of the payment with the check. The amount also is reported to the IRS.
taxmap/pubs/p525-004.htm#TXMP20db7574 |
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Include in your income on Form 1040, line 11, any alimony payments you receive. Amounts you receive for child support are not income to you. For complete information, see Publication 504, Divorced or Separated Individuals.
taxmap/pubs/p525-004.htm#TXMP0ebfa62c |
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A below-market loan is a loan on which no interest is charged or on which the interest is charged at a rate below the applicable federal rate. If you make a below-market gift or demand loan, you must include the forgone interest (at the federal rate) as interest income on your return. These loans are considered a transaction in which you, the lender, are treated as having made:
For more information on below-market loans, see chapter 1 of Publication 550.
taxmap/pubs/p525-004.htm#TXMP13c60c40 |
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If you receive a bribe, include it in your income.
taxmap/pubs/p525-004.htm#TXMP389474da |
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These contributions are not income to a candidate unless they are diverted to his or her personal use. To be exempt from tax, the contributions must be spent for campaign purposes or kept in a fund for use in future campaigns. However, interest earned on bank deposits, dividends received on contributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. Excess campaign funds transferred to an office account must be included in the officeholder's income on Form 1040, line 21, in the year transferred.
taxmap/pubs/p525-004.htm#TXMP18b6ce67 |
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If you sell property (such as land or a residence) under a contract, but the contract is canceled and you return the buyer's money in the same tax year as the original sale, you have no income from the sale. If the contract is canceled and you return the buyer's money in a later tax year, you must include your gain in your income for the year of the sale. When you return the money and take back the property in the later year, you treat the transaction as a purchase that gives you a new basis in the property equal to the funds you return to the buyer.
Special rules apply to the reacquisition of real property where a secured indebtedness (mortgage) to the original seller is involved. For further information, see Repossession in Publication 537, Installment Sales.
taxmap/pubs/p525-004.htm#TXMP35e515de |
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Do not include in your income amounts you receive from the passengers for driving a car in a car pool to and from work. These amounts are considered reimbursement for your expenses. However, this rule does not apply if you have developed car pool arrangements into a profit-making business of transporting workers for hire.
taxmap/pubs/p525-004.htm#TXMP0db99087 |
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A cash rebate you receive from a dealer or manufacturer of an item you buy is not income, but you must reduce your basis by the amount of the rebate.
You buy a new car for $9,000 cash and receive a $400 rebate check from the manufacturer. The $400 is not income to you. Your basis in the car is $8,600. This is your basis on which you figure gain or loss if you sell the car, and depreciation if you use it for business.
taxmap/pubs/p525-004.htm#TXMP0525d6d0 |
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You generally should not report these reimbursements on your return, unless you are figuring gain or loss from the casualty or theft. See Publication 547, Casualties, Disasters, and Thefts, for more information.
taxmap/pubs/p525-004.htm#TXMP522d4d54 |
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If you are the beneficiary of a charitable gift annuity, you must include the yearly annuity or fixed percentage payment in your income.
The payer will report the types of income you received on Form 1099-R. Report the gross distribution from box 1 on Form 1040, line 16a, or on Form 1040A, line 12a, and the part taxed as ordinary income (box 2a minus box 3) on Form 1040, line 16b, or on Form 1040A, line 12b. Report the portion taxed as capital gain (box 3) on Schedule D, line 8.
taxmap/pubs/p525-004.htm#TXMP32868768 |
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You should not report these payments on your return. See Publication 504 for more information.
taxmap/pubs/p525-004.htm#TXMP57379c10 |
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To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Include the following as ordinary income.
Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).
taxmap/pubs/p525-004.htm#TXMP630e4e24 Emotional distress. |
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Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Do not include them in your income.
If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, unlawful discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders.
taxmap/pubs/p525-004.htm#TXMP5135bcdc Deduction for costs involved in unlawful discrimination suits. |
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You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in Internal Revenue Code section 62(e), a claim against the United States government, or a claim under section 1862(b)(3)(A) of the Social Security Act. You can claim this deduction as an adjustment to income on Form 1040, line 36. The following rules apply.
taxmap/pubs/p525-004.htm#TXMP438310b1 Pre-existing agreement. |
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If you receive damages under a written binding agreement, court decree, or mediation award that was in effect (or issued on or before) September 13, 1995, do not include in income any of those damages received on account of personal injuries or sickness.
taxmap/pubs/p525-004.htm#TXMP692b20ab |
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Generally, if you receive benefits under a credit card disability or unemployment insurance plan, the benefits are taxable to you. These plans make the minimum monthly payment on your credit card account if you cannot make the payment due to injury, illness, disability, or unemployment. Report on Form 1040, line 21, the amount of benefits you received during the year that is more than the amount of the premiums you paid during the year.
taxmap/pubs/p525-004.htm#TXMP3d372e81 |
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If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that assistance is not included in your income. If the corporation qualifies as a tax-exempt charitable organization, the assistance is treated as a gift and is included in your basis of the house. If the corporation does not qualify, the assistance is treated as a rebate or reduction of the purchase price and is not included in your basis.
taxmap/pubs/p525-004.htm#TXMP1564c43d |
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If you get a job through an employment agency, and the fee is paid by your employer, the fee is not includible in your income if you are not liable for it. However, if you pay it and your employer reimburses you for it, it is includible in your income.
taxmap/pubs/p525-004.htm#TXMP0dbaca74 |
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You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit.
taxmap/pubs/p525-004.htm#TXMP0fdf0575 Energy conservation measure. |
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This includes installations or modifications that are primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand.
taxmap/pubs/p525-004.htm#TXMP20129661 Dwelling unit. |
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This includes a house, apartment, condominium, mobile home, boat, or similar property. If a building or structure contains both dwelling and other units, any subsidy must be properly allocated.
taxmap/pubs/p525-004.htm#TXMP0a5e45bb |
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An estate or trust, unlike a partnership, may have to pay federal income tax. If you are a beneficiary of an estate or trust, you may be taxed on your share of its income distributed or required to be distributed to you. However, there is never a double tax. Estates and trusts file their returns on Form 1041, U.S. Income Tax Return for Estates and Trusts, and your share of the income is reported to you on Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc.
taxmap/pubs/p525-004.htm#TXMP25bbd231 Current income required to be distributed. |
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If you are the beneficiary of an estate or trust that must distribute all of its current income, you must report your share of the distributable net income, whether or not you actually received it.
taxmap/pubs/p525-004.htm#TXMP6683f22a Current income not required to be distributed. |
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If you are the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current income, you must report:
taxmap/pubs/p525-004.htm#TXMP66b49d87 How to report. |
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Treat each item of income the same way that the estate or trust would treat it. For example, if a trust's dividend income is distributed to you, you report the distribution as dividend income on your return. The same rule applies to distributions of tax-exempt interest and capital gains.
The fiduciary of the estate or trust must tell you the type of items making up your share of the estate or trust income and any credits you are allowed on your individual income tax return.
taxmap/pubs/p525-004.htm#TXMP3e44d9ff Losses. |
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Losses of estates and trusts generally are not deductible by the beneficiaries.
taxmap/pubs/p525-004.htm#TXMP447b35db Grantor trust. |
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Income earned by a grantor trust is taxable to the grantor, not the beneficiary, if the grantor keeps certain control over the trust. (The grantor is the one who transferred property to the trust.) This rule applies if the property (or income from the property) put into the trust will or may revert (be returned) to the grantor or the grantor's spouse.
Generally, a trust is a grantor trust if the grantor has a reversionary interest valued (at the date of transfer) at more than 5% of the value of the transferred property.
taxmap/pubs/p525-004.htm#TXMP06065356 |
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If your personal expenses are paid for by another person, such as a corporation, the payment may be taxable to you depending upon your relationship with that person and the nature of the payment. But if the payment makes up for a loss caused by that person, and only restores you to the position you were in before the loss, the payment is not includible in your income.
taxmap/pubs/p525-004.htm#TXMP0cb034d9 |
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Include all fees for your services in your income. Examples of these fees are amounts you receive for services you perform as:
| If you are not an employee and the fees for your services from the same payor total $600 or more for the year, you may receive a Form 1099-MISC. |
taxmap/pubs/p525-004.htm#TXMP39ec712e Corporate director. |
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Corporate director fees are self-employment income. Report these payments on Schedule C or Schedule C-EZ (Form 1040).
taxmap/pubs/p525-004.htm#TXMP2c046989 Personal representatives. |
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All personal representatives must include in their gross income fees paid to them from an estate. If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on Form 1040, line 21. If you are in the trade or business of being an executor, report these fees as self-employment income on Schedule C or Schedule C-EZ (Form 1040). The fee is not includible in income if it is waived.
taxmap/pubs/p525-004.htm#TXMP7847ccac Manager of trade or business for bankruptcy estate. |
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Include in your income all payments received from your bankruptcy estate for managing or operating a trade or business that you operated before you filed for bankruptcy. Report this income on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP6ac8caa7 Notary public. |
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Report payments for these services on Schedule C or Schedule C-EZ (Form 1040). These payments are not subject to self-employment tax. (See the separate instructions for Schedule SE (Form 1040) for details.)
taxmap/pubs/p525-004.htm#TXMP2b3c6580 Election precinct official. |
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You should receive a Form W-2 showing payments for services performed as an election official or election worker. Report these payments on line 7 of Form 1040 or Form 1040A or on line 1 of Form 1040EZ.
taxmap/pubs/p525-004.htm#TXMP0aaec9a9 |
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If you operate a daycare service and receive payments under the Child and Adult Care Food Program administered by the Department of Agriculture that are not for your services, the payments generally are not included in your income. However, you must include in your income any part of the payments you do not use to provide food to individuals eligible for help under the program.
taxmap/pubs/p525-004.htm#TXMP097c10e2 |
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If you have a gain on a personal foreign currency transaction because of changes in exchange rates, you do not have to include that gain in your income unless it is more than $200. If the gain is more than $200, report it as a capital gain.
taxmap/pubs/p525-004.htm#TXMP632d251d |
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Payments you receive from a state, political subdivision, or a qualified foster care placement agency for providing care to qualified foster individuals in your home generally are not included in your income. However, you must include in your income payments received for the care of more than 5 individuals age 19 or older and certain difficulty-of-care payments.
A qualified foster individual is a person who:
taxmap/pubs/p525-004.htm#TXMP1b951739 Difficulty-of-care payments. |
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These are additional payments that are designated by the payer as compensation for providing the additional care that is required for physically, mentally, or emotionally handicapped qualified foster individuals. A state must determine that the additional compensation is needed, and the care for which the payments are made must be provided in your home.
You must include in your income difficulty-of-care payments received for more than:
taxmap/pubs/p525-004.htm#TXMP1fac8773 Maintaining space in home. |
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If you are paid to maintain space in your home for emergency foster care, you must include the payment in your income.
taxmap/pubs/p525-004.htm#TXMP6fa96dc7 Reporting taxable payments. |
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If you receive payments that you must include in your income, you are in business as a foster-care provider and you are self-employed. Report the payments on Schedule C or Schedule C-EZ (Form 1040). See Publication 587, Business Use of Your Home (Including Use by Daycare Providers), to help you determine the amount you can deduct for the use of your home.
taxmap/pubs/p525-004.htm#TXMP5b9c0034 |
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If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession.
taxmap/pubs/p525-004.htm#TXMP379ec51c |
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If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Report the fair market value of the tour on Form 1040, line 21, if you are not in the trade or business of organizing tours. You cannot deduct your expenses in serving as the voluntary leader of the group at the group's request. If you organize tours as a trade or business, report the tour's value on Schedule C or Schedule C-EZ (Form 1040).
taxmap/pubs/p525-004.htm#TXMP5df12852 |
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You must include your gambling winnings in your income on Form 1040, line 21. If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.
taxmap/pubs/p525-004.htm#TXMP7c2ca4fe Lotteries and raffles. |
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Winnings from lotteries and raffles are gambling winnings. In addition to cash winnings, you must include in your income the fair market value of bonds, cars, houses, and other noncash prizes. However, the difference between the fair market value and the cost of an oil and gas lease obtained from the government through a lottery is not includible in income.
taxmap/pubs/p525-004.htm#TXMP7d0881c4 Installment payments. |
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Generally, if you win a state lottery prize payable in installments, you must include in your gross income the annual payments and any amounts you receive designated as interest on the unpaid installments. If you sell future lottery payments for a lump sum, you must report the amount you receive from the sale as ordinary income (Form 1040, line 21) in the year you receive it.
taxmap/pubs/p525-004.htm#TXMP4f188afa Form W-2G. |
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You may have received a Form W-2G, Certain Gambling Winnings, showing the amount of your gambling winnings and any tax taken out of them. Include the amount from box 1 on Form 1040, line 21. Include the amount shown in box 2 on Form 1040, line 64, as federal income tax withheld.
taxmap/pubs/p525-004.htm#TXMP222d8560 |
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Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
taxmap/pubs/p525-004.htm#TXMP6ccb2292 Inherited pension or IRA. |
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If you inherited a pension or an individual retirement arrangement (IRA), you may have to include part of the inherited amount in your income. See Survivors and Beneficiaries in Publication 575, if you inherited a pension. See What If You Inherit an IRA in Publication 590, if you inherited an IRA.
taxmap/pubs/p525-004.htm#TXMP67764733 Expected inheritance. |
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If you sell an interest in an expected inheritance from a living person, include the entire amount you receive in gross income on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP2197f62c Bequest for services. |
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If you receive cash or other property as a bequest for services you performed while the decedent was alive, the value is taxable compensation.
taxmap/pubs/p525-004.htm#TXMP33d28c98 |
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Do not include in your income any payment you receive under the National Historic Preservation Act to preserve a historically significant property.
taxmap/pubs/p525-004.htm#TXMP1c18de3a |
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Losses from a hobby are not deductible from other income. A hobby is an activity from which you do not expect to make a profit. See Activity not for profit, earlier under Other Income.
| If you collect stamps, coins, or other items as a hobby for recreation and pleasure, and you sell any of the items, your gain is taxable as a capital gain. However, if you sell items from your collection at a loss, you cannot deduct the loss. |
taxmap/pubs/p525-004.htm#TXMP6d3b4ff1 |
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Restitution payments you receive as a Holocaust victim (or the heir of a Holocaust victim) and interest earned on the payments, including interest earned on amounts held in certain escrow accounts or funds, are not taxable. You also do not include them in any computations in which you would ordinarily add excludable income to your adjusted gross income, such as the computation to determine the taxable part of social security benefits. If the payments are made in property, your basis in the property is its fair market value when you receive it.
Excludable restitution payments are payments or distributions made by any country or any other entity because of persecution of an individual on the basis of race, religion, physical or mental disability, or sexual orientation by Nazi Germany, any other Axis regime, or any other Nazi-controlled or Nazi-allied country, whether the payments are made under a law or as a result of a legal action. They include compensation or reparation for property losses resulting from Nazi persecution, including proceeds under insurance policies issued before and during World War II by European insurance companies.
taxmap/pubs/p525-004.htm#TXMP06a7489a |
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Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
taxmap/pubs/p525-004.htm#TXMP014abf07 |
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If you are a member of a qualified Indian tribe that has fishing rights secured by treaty, executive order, or an Act of Congress as of March 17, 1988, do not include in your income amounts you receive from activities related to those fishing rights. The income is not subject to income tax, self-employment tax, or employment taxes.
taxmap/pubs/p525-004.htm#TXMP4b9a9417 |
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In general, you exclude from your income the amount of interest earned on a frozen deposit. A deposit is frozen if, at the end of the calendar year, you cannot withdraw any part of the deposit because:
taxmap/pubs/p525-004.htm#TXMP674efee0 Excludable amount. |
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The amount of interest you exclude from income for the year is the interest that was credited on the frozen deposit for that tax year minus the sum of:
taxmap/pubs/p525-004.htm#TXMP36a67bc5 |
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You may be able to exclude from income the interest from qualified U.S. savings bonds you redeem if you pay qualified higher educational expenses in the same year. Qualified higher educational expenses are those you pay for tuition and required fees at an eligible educational institution for you, your spouse, or your dependent. A qualified U.S. savings bond is a series EE bond issued after 1989 or a series I bond. The bond must have been issued to you when you were 24 years of age or older. For more information on this exclusion, see Education Savings Bond Program in chapter 1 of Publication 550.
taxmap/pubs/p525-004.htm#TXMP42599f26 |
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This interest is usually exempt from federal tax. However, you must show the amount of any tax-exempt interest on your federal income tax return. For more information, see State or Local Government Obligations in chapter 1 of Publication 550.
taxmap/pubs/p525-004.htm#TXMP03656cad |
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If a prospective employer asks you to appear for an interview and either pays you an allowance or reimburses you for your transportation and other travel expenses, the amount you receive generally is not taxable. You include in income only the amount you receive that is more than your actual expenses.
taxmap/pubs/p525-004.htm#TXMP22b11552 |
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Jury duty pay you receive must be included in your income on Form 1040, line 21, or Form 1040A, line 13. If you must give the pay to your employer because your employer continues to pay your salary while you serve on the jury, you can deduct the amount turned over to your employer as an adjustment to income. Enter the amount you repay your employer on Form 1040, line 34, or Form 1040A, line 19.
taxmap/pubs/p525-004.htm#TXMP2abfac34 |
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You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
You sell cars and help arrange car insurance for buyers. Insurance brokers pay back part of their commissions to you for referring customers to them. You must include the kickbacks in your income.
taxmap/pubs/p525-004.htm#TXMP2cf3f7c8 |
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You must include as other income on Form 1040, line 21 (or Schedule C or Schedule C-EZ (Form 1040) if you are self-employed) incentive payments from a manufacturer that you receive as a salesperson. This is true whether you receive the payment directly from the manufacturer or through your employer.
You sell cars for an automobile dealership and receive incentive payments from the automobile manufacturer every time you sell a particular model of car. You report the incentive payments on Form 1040, line 21.
taxmap/pubs/p525-004.htm#TXMP44c711fb |
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You generally do not include in income amounts you withdraw from your Archer MSA or Medicare Advantage MSA if you use the money to pay for qualified medical expenses. Generally, qualified medical expenses are those you can deduct on Schedule A (Form 1040). For more information about Archer MSAs or Medicare Advantage MSAs, see Publication 969.
taxmap/pubs/p525-004.htm#TXMP3b7b892d |
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You generally should not report these benefits on your return. See Publication 521 for more information.
taxmap/pubs/p525-004.htm#TXMP41009ced |
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If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on Form 1040, line 21. If you refuse to accept a prize, do not include its value in your income.
Prizes and awards in goods or services must be included in your income at their fair market value.
taxmap/pubs/p525-004.htm#TXMP3cce1cac Employee awards or bonuses. |
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Cash awards or bonuses given to you by your employer for good work or suggestions generally must be included in your income as wages. However, certain noncash employee achievement awards can be excluded from income. See Bonuses and awards under Miscellaneous Compensation, earlier.
taxmap/pubs/p525-004.htm#TXMP08be8f3e Prize points. |
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If you are a salesperson and receive prize points redeemable for merchandise, that are awarded by a distributor or manufacturer to employees of dealers, you must include their fair market value in your income. The prize points are taxable in the year they are paid or made available to you, rather than in the year you redeem them for merchandise.
taxmap/pubs/p525-004.htm#TXMP6999edd3 Pulitzer, Nobel, and similar prizes. |
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If you were awarded a prize in recognition of accomplishments in religious, charitable, scientific, artistic, educational, literary, or civic fields, you generally must include the value of the prize in your income. However, you do not include this prize in your income if you meet all of the following requirements.
These rules do not apply to scholarship or fellowship awards. See Scholarships and fellowships, later.
taxmap/pubs/p525-004.htm#TXMP79bb8622 |
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A qualified tuition program (also known as a 529 program) is a program set up to allow you to either prepay or contribute to an account established for paying a student's qualified higher education expenses at an eligible educational institution. A program can be established and maintained by a state, an agency or instrumentality of a state, or an eligible educational institution.
The part of a distribution representing the amount paid or contributed to a QTP is not included in income. This is a return of the investment in the program.
The beneficiary generally does not include in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified higher education expenses. See Publication 970 for more information.
taxmap/pubs/p525-004.htm#TXMP018f654f |
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The following types of payments are treated as pension or annuity income and are taxable under the rules explained in Publication 575.
taxmap/pubs/p525-004.htm#TXMP11af9565 |
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If you receive a reward for providing information, include it in your income.
taxmap/pubs/p525-004.htm#TXMP7d0b4e62 |
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You may be able to exclude from income all or part of any gain from the sale or exchange of a personal residence. See Publication 523.
taxmap/pubs/p525-004.htm#TXMP4242dc7f |
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If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain. Report it on Schedule D (Form 1040). You cannot deduct a loss.
However, if you sold an item you held for investment, such as gold or silver bullion, coins, or gems, any gain is taxable as a capital gain and any loss is deductible as a capital loss.
taxmap/pubs/p525-004.htm#TXMP337aaf0b Example. |
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You sold a painting on an online auction website for $100. You bought the painting for $20 at a garage sale years ago. Report your $80 gain as a capital gain on Schedule D (Form 1040).
taxmap/pubs/p525-004.htm#TXMP0ce2361a |
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A candidate for a degree can exclude amounts received as a qualified scholarship or fellowship. A qualified scholarship or fellowship is any amount you receive that is for:
taxmap/pubs/p525-004.htm#TXMP1f649db2 Payment for services. |
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Generally, you must include in income the part of any scholarship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree.
Do not include in income the part of any scholarship or fellowship representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.
For information about the rules that apply to a tax-free qualified tuition reduction provided to employees and their families by an educational institution, see Publication 970.
taxmap/pubs/p525-004.htm#TXMP6b843082 VA payments. |
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Allowances paid by the Department of Veterans Affairs are not included in your income. These allowances are not considered scholarship or fellowship grants.
taxmap/pubs/p525-004.htm#TXMP762afea9 Prizes. |
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Scholarship prizes won in a contest are not scholarships or fellowships if you do not have to use the prizes for educational purposes. You must include these amounts in your income on Form 1040, line 21, whether or not you use the amounts for educational purposes.
taxmap/pubs/p525-004.htm#TXMP47ee4f9a |
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If you are an eligible individual who receives benefits under the Smallpox Emergency Personnel Protection Act of 2003 for a covered injury resulting from a covered countermeasure, you can exclude the payment from your income (to the extent it is not allowed as a medical and dental expense deduction on Schedule A (Form 1040)). Eligible individuals include health care workers, emergency personnel, and first responders in a smallpox emergency, who have received a smallpox vaccination.
taxmap/pubs/p525-004.htm#TXMP5c14d3ee |
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Social security or equivalent railroad retirement benefits, if taxable, must be included in the income of the person who has the legal right to receive the benefits. Whether any of your benefits are taxable, and the amount that is taxable, depends on the amount of the benefits and your other income.
Social security benefits include any monthly benefit under Title II of the Social Security Act and any part of a tier I railroad retirement benefit treated as a social security benefit. Social security benefits do not include any supplemental security income (SSI) payments.
taxmap/pubs/p525-004.htm#TXMP081e91a0 Form SSA-1099. |
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If you received social security benefits during the year, you will receive Form SSA-1099, Social Security Benefit Statement. An IRS Notice 703 will be enclosed with your Form SSA-1099. This notice includes a worksheet you can use to figure whether any of your benefits are taxable.
For an explanation of the information found on your Form SSA-1099, see Publication 915.
taxmap/pubs/p525-004.htm#TXMP1dd86020 Form RRB-1099. |
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If you received equivalent railroad retirement or special guaranty benefits during the year, you will receive Form RRB-1099, Payments by the Railroad Retirement Board.
For an explanation of the information found on your Form RRB-1099, see Publication 915.
If you received other railroad retirement benefits, see Railroad retirement annuities, earlier.
taxmap/pubs/p525-004.htm#TXMP53227540 Joint return. |
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If you are married and file a joint return, you and your spouse must combine your incomes and your social security and equivalent railroad retirement benefits when figuring whether any of your combined benefits are taxable. Even if your spouse did not receive any benefits, you must add your spouse's income to yours when figuring if any of your benefits are taxable.
taxmap/pubs/p525-004.htm#TXMP48334862 Taxable amount. |
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Use the worksheet in the Form 1040 or Form 1040A instruction package to determine the amount of your benefits to include in your income. Publication 915 also has worksheets you can use. However, you must use the worksheets in Publication 915 if any of the following situations apply.
taxmap/pubs/p525-004.htm#TXMP7127e439 Benefits may affect your IRA deduction. |
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You must use the special worksheets in appendix B of Publication 590 to figure your taxable benefits and your IRA deduction if all of the following conditions apply.
taxmap/pubs/p525-004.htm#TXMP0e19a220 How to report. |
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If any of your benefits are taxable, you must use either Form 1040 or Form 1040A to report the taxable part. You cannot use Form 1040EZ. Report your net benefits (the amount in box 5 of your Forms SSA-1099 and RRB-1099) on line 20a of Form 1040 or line 14a of Form 1040A. Report the taxable part (from the last line of the worksheet) on line 20b of Form 1040 or on line 14b of Form 1040A.
taxmap/pubs/p525-004.htm#TXMP16afbe70 |
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If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
taxmap/pubs/p525-004.htm#TXMP40ff8766 |
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Do not include in your income a school board mileage allowance for taking children to and from school if you are not in the business of taking children to school. You cannot deduct expenses for providing this transportation.
taxmap/pubs/p525-004.htm#TXMP27162b9b |
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Amounts deducted from your pay for union dues, assessments, contributions, or other payments to a union cannot be excluded from your income.
You may be able to deduct some of these payments as a miscellaneous deduction subject to the 2% of AGI limit if they are related to your job and if you itemize deductions on Schedule A (Form 1040). For more information, get Publication 529, Miscellaneous Deductions.
taxmap/pubs/p525-004.htm#TXMP378c749a Strike and lockout benefits. |
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Benefits paid to you by a union as strike or lockout benefits, including both cash and the fair market value of other property, usually are included in your income as compensation. You can exclude these benefits from your income only when the facts clearly show that the union intended them as gifts to you.
taxmap/pubs/p525-004.htm#TXMP3d187677 Reimbursed union convention expenses. |
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If you are a delegate of your local union chapter and you attend the annual convention of the international union, do not include in your income amounts you receive from the international union to reimburse you for expenses of traveling away from home to attend the convention. You cannot deduct the reimbursed expenses, even if you are reimbursed in a later year. If you are reimbursed for lost salary, you must include that reimbursement in your income.
taxmap/pubs/p525-004.htm#TXMP1e728509 |
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If you are a customer of an electric utility company and you participate in the utility's energy conservation program, you may receive on your monthly electric bill either:
| Previous Page:
Publication 525 - Taxable and Nontaxable Income - Sickness and Injury BenefitsNext Page:
Publication 525 - Taxable and Nontaxable Income - Repayments Use
to find additional instances of index items. |
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