IRS Releases Publication 17 (2020), Your Federal Income Tax (For Individuals)

Department

of the

Treasury

Internal

Revenue

Service

Your Federal	Publication 17
	Catalog Number 10311G
Income Tax	For use in preparing
For Individuals	2020 Returns

TAX GUIDE

2020

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Dec 8, 2020

Department

of the

Treasury

Internal

Revenue

Service

Your Federal

Income Tax

For Individuals

Contents

What's New. . . . . . . . . . . . . . . . . . . . . . .1

Reminders . . . . . . . . . . . . . . . . . . . . . . . .2

Introduction. . . . . . . . . . . . . . . . . . . . . . .3

Part One. The Income Tax Return. . . . . . . . .5

1Filing Information . . . . . . . . . . . . . . . .5

2Filing Status . . . . . . . . . . . . . . . . . . . 20

3Dependents . . . . . . . . . . . . . . . . . . . 25

4Tax Withholding and Estimated Tax. . . . . 36

Part Two. Income and Adjustments

to Income. . . . . . . . . . . . . . . . . . . . . 45

5Wages, Salaries, and Other Earnings. . . . 46

6Interest Income . . . . . . . . . . . . . . . . . 53

7Social Security and Equivalent Railroad

Retirement Benefits . . . . . . . . . . . . . . 61

8Other Income . . . . . . . . . . . . . . . . . . 66

9Individual Retirement Arrangements

(IRAs). . . . . . . . . . . . . . . . . . . . . 75

Part Three. Standard Deduction, Itemized

Deductions, and Other Deductions . . . . . . 90

10Standard Deduction. . . . . . . . . . . . . . 90

11Taxes. . . . . . . . . . . . . . . . . . . . . . 94

12Other Itemized Deductions. . . . . . . . . . 98

Part Four. Figuring Your Taxes, and

Refundable and Nonrefundable Credits . . 104

13How To Figure Your Tax . . . . . . . . . . . 104

14Child Tax Credit and Credit for Other

Dependents. . . . . . . . . . . . . . . . . 106

2020 Tax Table. . . . . . . . . . . . . . . . . . . . 109

2020 Tax Computation Worksheet. . . . . . . . 121

2020 Tax Rate Schedules . . . . . . . . . . . . . . 122

Your Rights as a Taxpayer. . . . . . . . . . . . . 123

How To Get Tax Help. . . . . . . . . . . . . . . . 124

Index. . . . . . . . . . . . . . . . . . . . . . . . . . 126

Where To File. . . . . . . . . . . . . . . . . . . . . 135

All material in this publication may be reprinted freely. A citation to Your Federal Income Tax (2020) would be appropriate.

The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of:

Tax laws enacted by Congress,

Treasury regulations, and

Court decisions.

However, the information given does not cover every situation and is not intended to replace the law or change its meaning.

This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS.

All taxpayers have important rights when working with the IRS. These rights are described in Your Rights as a Taxpayer in the back of this publication.

What's New

This section summarizes important tax changes that took effect in 2020. Most of these changes are discussed in more detail throughout this publication.

Future developments. For the latest information about the tax law topics covered in this publication, such as legislation enacted after it was published, go to IRS.gov/ Pub17.

Publication 17 changes. We have removed the following 2019 chapters from this publication: 6, 8, 9, 10, 13, 14, 15, 16, 18, 19, 20, 22, 24, 25, 26, 29, 30, 31, 33, 34, 35, and 36. You can find most of the information previously found in those chapters in the primary publi-cation. Please see 2020 Publica-tion 17 changes, later.

Due date of return. File your tax return by April 15, 2021. See chap-ter 1.

Economic impact payment. Any economic impact payment you re-ceived is not taxable for federal in-come tax purposes but reduces your recovery rebate credit.

Recovery rebate credit. This credit is figured like last year's eco-nomic impact payment, except the amounts are based on tax year 2020, instead of tax year 2019 (or tax year 2018 if tax year 2019 infor-mation was not available). The maximum credit is $1,200 ($2,400 if married filing jointly) plus $500 for each qualifying child. For more information, see the instructions for Forms 1040 and 1040-SR, line 30. Form 1040-NR revision. Form 1040-NR has been revised to more closely follow the format of Forms 1040 and 1040-SR. Beginning in 2020, Form 1040-NR will use Schedules 1, 2, and 3.

Charitable contributions. If you don't itemize your deductions on Schedule A (Form 1040), you may qualify to take a deduction for char-itable contributions of up to $300. For more information, see the in-structions for Forms 1040 and 1040-SR, line 10b.

Temporary suspension of limits for cash contributions. For tax

year 2020, certain cash contribu-tions you made are not subject to the 60% limit for cash contribu-tions. For more information, see Pub. 526.

Standard deduction amount in-creased. For 2020, the standard deduction amount has been in-creased for all filers. The amounts are:

Single or Married filing sepa-rately—$12,400;

Married filing jointly or Qualify-ing widow(er)—$24,800; and

Head of household—$18,650. See chapter 10.

Virtual currency. If, in 2020, you engaged in a transaction involving virtual currency, you will need to answer the question on page 1 of Form 1040 or 1040-SR. See Virtual Currency in the Instructions for Forms 1040 and 1040-SR. In 2019, this question was on Schedule 1.

Deductible IRA contributions. You no longer need to be younger than age 701/2 to take a deduction for your contributions to an IRA. See the instructions for Schedule 1 (Form 1040), line 19.

Coronavirus tax relief for cer-tain individuals. The Coronavirus Aid, Relief, and Economic Security (CARES) Act permits certain indi-viduals who file Schedule SE (Form 1040) or Schedule H (Form 1040) to defer the payment of 50% of the social security tax imposed for the period beginning on March 27, 2020, and ending December 31, 2020. For more information, see the instructions for Sched-ule SE (Form 1040) or Schedule H (Form 1040). For information on re-porting the deferral, see the in-structions for Schedule 3 (Form 1040), line 12e.

Coronavirus distributions. Re-cent legislation contains new rules that provide for tax-favored with-drawals, in-come inclusion, and re-payments for individuals who were diagnosed with or suffered eco-nomic losses as a result of the co-ronavirus. See Coronavirus Distri-butions in Pub. 590-B for more information.

Qualified disaster distributions. Special rules provide for tax-fa-vored distributions from and repay-ments to certain retirement plans for taxpayers who suffered eco-nomic losses as a result of certain major disasters in tax years 2018, 2019, and 2020. For your 2020 re-turn, these qualified disaster distri-butions are those in 2020 Form 8915-C, Qualified 2018 Disaster Retirement Plan Distributions and Repayments, and its instructions; 2020 Form 8915-D, Qualified 2019 Disaster Retirement Plan Distribu-tions and Repayments, and its in-structions; and 2020 Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repay-ments, and its instructions. See chapter 9.

Credits for sick and family leave for certain self-employed indi-viduals. The Families First Coro-navirus Relief Act (FFCRA) helps self-employed individuals affected by coronavirus by providing paid sick leave and paid family leave credits equivalent to those that em-ployers are required to provide their employees for qualified sick leave wages and qualified family leave wages paid during the period beginning April 1, 2020, and end-ing December 31, 2020. For more information, see the instructions for Form 7202 and Schedule 3 (Form 1040), line 12b.

Form 1040-X, Amended U.S. In-dividual Income Tax Return. Starting last summer, taxpayers were able to file their Form 1040-X electronically using available tax software products. The electronic Form 1040-X will be implemented in phases. During the first phase, only tax year 2019 Forms 1040 and 1040-SR returns can be amen-ded electronically. Taxpayers will still have the option to submit a pa-per version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form.

Schedule LEP (Form 1040), Re-quest for Change in Language Preference. Schedule LEP is a new form that allows taxpayers to state a preference to receive writ-ten communications from the IRS

in a language other than English. For more information, including what languages are available and how to file, see Schedule LEP.

Standard mileage rates. The 2020 rate for business use of your vehicle is 57.5 cents a mile. The 2020 rate for use of your vehicle to get medical care or to move is 17 cents a mile. See Moving Expen-ses in Pub. 3, Armed Forces' Tax Guide.

Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is in-creased to $72,900 ($113,400 if married filing jointly or qualifying widow(er); $56,700 if married filing separately). The income levels at which the AMT exemption begins to phase out have increased to $518,400 ($1,036,800 if married fil-ing jointly or qualifying widow(er)).

Qualified business income de-duction. The simplified worksheet for figuring your qualified business income deduction is now Form 8995, Qualified Business Income Deduction Simplified Computation. If you don't meet the requirements to file Form 8995, use Form 8995-A, Qualified Business In-come Deduction. For more infor-mation, see each form's instruc-tions.

Adoption credit. The adoption credit and the exclusion for em-ployer-provided adoption benefits have both increased to $14,300 per eligible child in 2020. The amount begins to phase out if you have modified adjusted gross in-come (MAGI) in excess of $214,520 and is completely phased out if your MAGI is $254,520 or more.

Identity Protection Personal Identification Numbers (IP PINs). New IP PINs are generated every year. This year, they will gen-erally be sent out by mid-January 2021. Use this IP PIN on your 2020 return as well as any prior-year re-turns you file in 2021.

Publication 17 (2020)Page 1

2020 Publication 17 Changes

Note. This publication does not cover the topics listed in the following table. Please see the primary publication.

Chapter Removed

Title of Chapter

Primary Publication

6

Tip Income

Pub. 531, Reporting Tip Income

8

Dividends and Other Distributions

Pub. 550, Investment Income and

Expenses

9

Rental Income and Expenses

Pub. 527, Residential Rental Property

(Including Rental of Vacation Homes)

10

Retirement Plans, Pensions, and Annuities

Pub. 575, Pension and Annuity Income

13

Basis of Property

Pub. 551, Basis of Assets

14

Sale of Property

Pub. 550

15

Selling Your Home

Pub. 523, Selling Your Home

16

Reporting Gains and Losses

Pub. 550

18

Alimony

504, Divorced or Separated Individuals

19

Education-Related Adjustments

Pub. 970, Tax Benefits for Education

20

Other Adjustments to Income

Pub. 463, Travel, Gift, and Car Expenses

22

Medical and Dental Expenses

Pub. 502, Medical and Dental Expenses

24

Interest Expense

Pub. 550

Pub. 936,

Home Mortgage Interest

Deduction

25

Charitable Contributions

561, Determining the Value of Donated

Property

Pub. 526, Charitable Contributions

26

Nonbusiness Casualty and Theft Losses

547, Casualties, Disasters, and Thefts

29

Tax on Unearned Income of Certain Minor

929, Tax Rules for Children and

Children

Dependents

30

Child and Dependent Care Credit

Pub. 503, Child and Dependent Care

Expenses

31

Credit for the Elderly or the Disabled

524, Credit for the Elderly or the Disabled

33

Education Credits

Pub. 970, Tax Benefits for Education

34

Earned Income Credit (EIC)

Pub. 596, Earned Income Credit (EIC)

35

Premium Tax Credit

Pub. 974, Premium Tax Credit (PTC)

36

Other Credits

Reminders

Listed below are important reminders and other items that may help you file your 2020 tax return. Many of these items are explained in more detail later in this publication.

Special rules for eligible gains invested in Qualified Opportu-nity Funds. If you have an eligible gain, you can invest that gain into a Qualified Opportunity Fund (QO Fund) and elect to defer part or all of the gain that is otherwise includi-ble in income. The gain is deferred until the date you sell or exchange the investment or December 31, 2026, whichever is earlier. You may also be able to permanently

Page 2

exclude gain from the sale or ex-change of an investment in a QO Fund if the investment is held for at least 10 years. For information about what types of gains entitle you to elect these special rules, see the Instructions for Schedule D (Form 1040). For information on how to elect to use these special rules, see the Instructions for Form 8949.

Enter your social security num-ber (SSN). Enter your SSN in the space provided on your tax form. If you filed a joint return for 2019 and are filing a joint return for 2020 with the same spouse, enter your names and SSNs in the same

order as on your 2019 return. See chapter 1.

Secure your tax records from identity theft. Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying informa-tion, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return us-ing your SSN to receive a refund. For more information about identity theft and how to reduce your risk from it, see chapter 1.

Taxpayer identification num-bers. You must provide the taxpayer identification number for

each person for whom you claim certain tax benefits. This applies even if the person was born in 2020. Generally, this number is the person's SSN. See chapter 1.

Foreign-source income. If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by law or a tax treaty. This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. This applies to earned income (such as wages and tips) as well as unearned

Publication 17 (2020)

income (such as interest, divi-dends, capital gains, pensions, rents, and royalties).

If you live outside the United States, you may be able to exclude part or all of your foreign earned in-come. For details, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Foreign financial assets. If you had foreign financial assets in 2020, you may have to file Form 8938 with your return. See Form 8938 and its instructions or visit IRS.gov/Form8938 for details.

Automatic 6-month extension to file tax return. You can get an au-tomatic 6-month extension of time to file your tax return. See chap-ter 1.

Payment of taxes. You can pay your taxes by making electronic payments online; from a mobile de-vice using the IRS2Go app; or in cash, or by check or money order. Paying electronically is quick, easy, and faster than mailing in a check or money order. See chap-ter 1.

Faster ways to file your return. The IRS offers fast, accurate ways

to file your tax return information without filing a paper tax return. You can use IRS e-file (electronic filing). See chapter 1.

Free electronic filing. You may be able to file your 2020 taxes on-line for free. See chapter 1.

Change of address. If you change your address, notify the IRS. See chapter 1.

Refund on a late-filed return. If you were due a refund but you did not file a return, you must generally file your return within 3 years from the date the return was due (in-cluding extensions) to get that re-fund. See chapter 1.

Frivolous tax returns. The IRS has published a list of positions that are identified as frivolous. The penalty for filing a frivolous tax re-turn is $5,000. See chapter 1.

Filing erroneous claim for re-fund or credit. You may have to pay a penalty if you file an errone-ous claim for refund or credit. See chapter 1.

Access your online account. You must authenticate your iden-tity. To securely log into your fed-eral tax account, go to IRS.gov/

Account. View the amount you owe, review 24 months of payment history, access online payment op-tions, and create or modify an on-line payment agreement. You can also access your tax records online.

Health care coverage. If you need health care coverage, go to HealthCare.gov to learn about health insurance options for you and your family, how to buy health insurance, and how you might qualify to get financial assistance to buy health insurance.

Disclosure, Privacy Act, and pa-perwork reduction information. The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduc-tion Act of 1980 require that when we ask you for information, we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory un-der the law. A complete statement on this subject can be found in your tax form instructions.

Preparer e-file mandate. Most paid preparers must e-file returns they prepare and file. Your pre-parer may make you aware of this requirement and the options avail-able to you.

Treasury Inspector General for Tax Administration. If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 800-366-4484 (call 800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). You can remain anonymous.

Photographs of missing chil-dren. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the

photographs and calling 1-800-THE-LOST (800-843-5678) if you recognize a child.

Introduction

This publication covers the general rules for filing a federal income tax return. It supplements the informa-tion contained in your tax form in-structions. It explains the tax law to make sure you pay only the tax you owe and no more.

How this publication is ar-ranged. Pub. 17 closely follows Form 1040, U.S. Individual Income Tax Return, and Form 1040 -SR, U.S. Tax Return for Seniors, and their three Schedules 1 through 3. Pub. 17 is divided into four parts. Each part is further divided into chapters, most of which generally discuss one line of the form or one line of one of the three schedules. The introduction at the beginning of each part lists the schedule(s) discussed in that part.

The table of contents inside the front cover, the introduction to each part, and the index in the back of the publication are useful tools to help you find the informa-tion you need.

What is in this publication. This publication begins with the rules for filing a tax return. It explains:

1. Who must file a return,

2. When the return is due,

3. How to e-file your return, and

4. Other general information.

Publication 17 (2020)

It will help you identify which filing status you qualify for, whether you can claim any dependents, and whether the income you receive is taxable. The publication goes on to explain the standard deduction, the kinds of expenses you may be able to deduct, and the various kinds of credits you may be able to take to reduce your tax.

Throughout this publication are examples showing how the tax law applies in typical situations. Also throughout this publication are flowcharts and tables that present tax information in an easy-to-un-derstand manner.

Many of the subjects discussed in this publication are discussed in greater detail in other IRS publica-tions. References to those other publications are provided for your information.

Icons. Small graphic symbols, or icons, are used to draw your at-tention to special information. See Table 1 for an explanation of each icon used in this publication.

What is not covered in this pub-lication. Some material that you may find helpful is not included in this publication but can be found in

your tax form instruction booklet.

This includes lists of:

Where to report certain items shown on information docu-ments, and

Tax Topics you can read at IRS.gov/TaxTopics.

If you operate your own busi-ness or have other self-employ-ment income, such as from baby-sitting or selling crafts, see the following publications for more in-formation.

Pub. 334, Tax Guide for Small Business.

Pub. 535, Business Expen-ses.

Pub. 587, Business Use of Your Home.

Help from the IRS. There are many ways you can get help from the IRS. These are explained un-der How To Get Tax Help at the end of this publication.

Comments and suggestions. We welcome your comments about this publication and sugges-tions for future editions.

You can send us comments through IRS.gov/FormComments. Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution

Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond indi-vidually to each comment re-ceived, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Do not send tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a tax ques-tion not answered by this publica-tion or the How To Get Tax Help section at the end of this publica-tion, go to the IRS Interactive Tax Assistant page at IRS.gov/ Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Getting tax forms, instruc-tions, and publications. Visit IRS.gov/Forms to download cur-rent and prior-year forms, instruc-tions, and publications.

Ordering tax forms, instruc-tions, and publications. Go to IRS.gov/OrderForms to order cur-rent forms, instructions, and publi-cations; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Do not resubmit requests you’ve already sent us. You can

Page 3

get forms and publications faster online.

IRS mission. Provide America's helping them understand and meet force the law with integrity and fair-taxpayers top-quality service by their tax responsibilities and en- ness to all.

Table 1. Legend of Icons

Icon

Explanation

!

Items that may cause you particular problems, or an alert about pending legislation that may be enacted after

CAUTION

this publication goes to print.

An Internet site or an email address.

An address you may need.

Items you should keep in your personal records.

RECORDS

Items you may need to figure or a worksheet you may need to complete and keep for your records.

An important phone number.

TIP

Helpful information you may need.

Page 4Publication 17 (2020)

Part One.

The Income Tax Return

The four chapters in this part provide basic information on the tax system. They take you through the first steps of filling out a tax return. They also provide information about dependents, and discuss recordkeeping requirements, IRS e-file (electronic filing), certain penalties, and the two methods used to pay tax during the year: withholding and estimated tax. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:

Schedule 1, Additional Income and Adjustments to Income; and

Schedule 3 (Part II), Other Payments and Refundable Credits.

1.

Filing

Information

What's New

Form 1040-NR revision. Form 1040-NR has been revised to more closely follow the format of Forms 1040 and 1040-SR. Beginning in 2020, Form 1040-NR will use Schedules 1, 2, and 3.

Who must file. Generally, the amount of in-come you can receive before you must file a re-turn has been increased. See Table 1-1, Ta-ble 1-2, and Table 1-3 for the specific amounts.

Reminders

File online. Rather than filing a return on pa-per, you may be able to file electronically using IRS e-file. For more information, see Why Should I File Electronically, later.

Access your online account (individual tax-payers only). Go to IRS.gov/Account to se-curely access information about your federal tax account.

View the amount you owe, pay online, or set up an online payment agreement.

Access your tax records online.

Review the past 24 months of your pay-ment history.

Go to IRS.gov/SecureAccess to view the required identity authentication process.

Change of address. If you change your ad-dress, you should notify the IRS. You can use Form 8822 to notify the IRS of the change. See Change of Address, later, under What Happens After I File.

Enter your social security number. You must enter your social security number (SSN) in the spaces provided on your tax return. If you

file a joint return, enter the SSNs in the same or-der as the names.

Direct deposit of refund. Instead of getting a paper check, you may be able to have your re-fund deposited directly into your account at a bank or other financial institution. See Direct Deposit under Refunds, later. If you choose di-rect deposit of your refund, you may be able to split the refund among two or three accounts.

Pay online or by phone. If you owe additional tax, you may be able to pay online or by phone. See How To Pay, later.

Installment agreement. If you can’t pay the full amount due with your return, you may ask to make monthly installment payments. See In-stallment Agreement, later, under Amount You Owe. You may be able to apply online for a pay-ment agreement if you owe federal tax, interest, and penalties.

Automatic 6-month extension. You can get an automatic 6-month extension to file your tax return if, no later than the date your return is due, you file Form 4868. See Automatic Exten-sion, later.

Service in combat zone. You are allowed ex-tra time to take care of your tax matters if you are a member of the Armed Forces who served in a combat zone, or if you served in a combat zone in support of the Armed Forces. See Indi-viduals Serving in Combat Zone, later, under When Do I Have To File.

Adoption taxpayer identification number. If a child has been placed in your home for purpo-ses of legal adoption and you won't be able to get a social security number for the child in time to file your return, you may be able to get an adoption taxpayer identification number (ATIN). For more information, see Social Security Num-ber (SSN), later.

Taxpayer identification number for aliens. If you or your dependent is a nonresident or res-ident alien who doesn't have and isn't eligible to get a social security number, file Form W-7, Ap-plication for IRS Individual Taxpayer Identifica-tion Number, with the IRS. For more informa-tion, see Social Security Number (SSN), later.

Individual taxpayer identification number (ITIN) renewal. Some ITINs must be renewed. If you haven't used your ITIN on a U.S. tax re-turn at least once in the last 3 years, or if your ITIN has the middle digits 88, (9NN-88-NNNN)

or if your ITIN has the middle digits 90, 91, 92, 94, 95, 96, 97, 98, or 99 and was assigned be-fore 2013, it expired at the end of 2020 and must be renewed if you need to file a U.S. fed-eral tax return in 2021. You don't need to renew your ITIN if you don't need to file a federal tax return. You can find more information at IRS.gov/ITIN.

ITINs with middle digits 70 through 87 TIP have expired and must also be re-newed if you need to file a tax return in

2021 and haven’t already renewed the ITIN.

Frivolous tax submissions. The IRS has published a list of positions that are identified as frivolous. The penalty for filing a frivolous tax re-turn is $5,000. Also, the $5,000 penalty will ap-ply to other specified frivolous submissions. For more information, see Civil Penalties, later.

Introduction

This chapter discusses the following topics.

Whether you have to file a return.

How to file electronically.

How to file for free.

When, how, and where to file your return.

What happens if you pay too little or too much tax.

What records you should keep and how long you should keep them.

How you can change a return you have al-ready filed.

Do I Have To File a Return?

You must file a federal income tax return if you are a citizen or resident of the United States or a resident of Puerto Rico and you meet the filing requirements for any of the following categories that apply to you.

1. Individuals in general. (There are special rules for surviving spouses, executors, ad-ministrators, legal representatives, U.S. citizens and residents living outside the United States, residents of Puerto Rico, and individuals with income from U.S. possessions.)

Chapter 1Filing InformationPage 5

2. Dependents.

3. Certain children under age 19 or full-time students.

4. Self-employed persons.

5. Aliens.

The filing requirements for each category are explained in this chapter.

The filing requirements apply even if you don't owe tax.

Even if you don't have to file a return, it TIP may be to your advantage to do so.

See Who Should File, later.

File only one federal income tax return

for the year regardless of how many CAUTION jobs you had, how many Forms W-2 you received, or how many states you lived in during the year. Don't file more than one original return for the same year, even if you haven’t re-ceived your refund or haven’t heard from the IRS since you filed.

Individuals—In General

If you are a U.S. citizen or resident, whether you must file a return depends on three factors.

1. Your gross income.

2. Your filing status.

3. Your age.

To find out whether you must file, see Ta-ble 1-1, Table 1-2, and Table 1-3. Even if no ta-

Table 1-1. 2020 Filing Requirements for Most Taxpayers

	AND at the end of 2020 you	THEN file a return if
IF your filing status is...		your gross income
	were...*	was at least...**
Single	under 65	$12,400
	65 or older	$14,050
Married filing jointly***	under 65 (both spouses)	$24,800
	65 or older (one spouse)	$26,100
	65 or older (both spouses)	$27,400
Married filing separately	any age	$5
Head of household	under 65	$18,650
	65 or older	$20,300
Qualifying widow(er)	under 65	$24,800
	65 or older	$26,100

If you were born on January 1, 1956, you are considered to be age 65 at the end of 2020. (If your spouse died in 2020 or if you are preparing a return for someone who died in 2020, see Pub. 501.)

Gross income means all income you received in the form of money, goods, property, and services that isn't exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Don't include any social security benefits unless

(a) you are married filing a separate return and you lived with your spouse at any time during 2020, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the Instructions for Forms 1040 and 1040-SR or Pub. 915 to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, don't reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9.

If you didn't live with your spouse at the end of 2020 (or on the date your spouse died) and your gross income was at least $5, you must file a return regardless of your age.

ble shows that you must file, you may need to file to get money back. See Who Should File, later.

Gross income. This includes all income you receive in the form of money, goods, property, and services that isn't exempt from tax. It also includes income from sources outside the Uni-ted States or from the sale of your main home (even if you can exclude all or part of it). Include part of your social security benefits if:

1. You were married, filing a separate return, and you lived with your spouse at any time during 2020; or

2. Half of your social security benefits plus your other gross income and any tax-ex-empt interest is more than $25,000 ($32,000 if married filing jointly).

If either (1) or (2) applies, see the Instructions for Forms 1040 and 1040-SR or Pub. 915, So-cial Security and Equivalent Railroad Retire-ment Benefits, to figure the social security ben-efits you must include in gross income.

Common types of income are discussed in Part Two of this publication.

Community property states. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you and your spouse lived in a community property state, you must usually follow state law to determine what is community property and what is separate in-come. For details, see Form 8958 and Pub. 555.

Page 6Chapter 1Filing Information

Nevada, Washington, and California do-mestic partners. A registered domestic part-ner in Nevada, Washington, or California must generally report half the combined community income of the individual and his or her domestic partner. See Pub. 555.

Self-employed individuals. If you are self-employed, your gross income includes the amount on line 7 of Schedule C (Form 1040), Profit or Loss From Business; and line 9 of Schedule F (Form 1040), Profit or Loss From Farming. See Self-Employed Persons, later, for more information about your filing requirements.

If you don't report all of your self-em-

ployment income, your social security CAUTION benefits may be lower when you retire.

Filing status. Your filing status depends on whether you are single or married and on your family situation. Your filing status is determined on the last day of your tax year, which is De-cember 31 for most taxpayers. See chapter 2 for an explanation of each filing status.

Age. If you are 65 or older at the end of the year, you can generally have a higher amount of gross income than other taxpayers before you must file. See Table 1 -1. You are consid-ered 65 on the day before your 65th birthday. For example, if your 65th birthday is on January 1, 2021, you are considered 65 for 2020.

Surviving Spouses, Executors, Administrators, and Legal Representatives

You must file a final return for a decedent (a person who died) if both of the following are true.

You are the surviving spouse, executor, administrator, or legal representative.

The decedent met the filing requirements at the date of death.

For more information on rules for filing a de-cedent's final return, see Pub. 559.

U.S. Citizens and Resident Aliens Living Abroad

To determine whether you must file a return, in-clude in your gross income any income you re-ceived abroad, including any income you can exclude under the foreign earned income exclu-sion. For information on special tax rules that may apply to you, see Pub. 54. It is available online and at most U.S. embassies and consu-lates. See How To Get Tax Help in the back of this publication.

Residents of Puerto Rico

If you are a U.S. citizen and also a bona fide resident of Puerto Rico, you must generally file a U.S. income tax return for any year in which you meet the income requirements. This is in addition to any legal requirement you may have to file an income tax return with Puerto Rico.

If you are a bona fide resident of Puerto Rico for the entire year, your U.S. gross income doesn't include income from sources within Puerto Rico. It does, however, include any in-come you received for your services as an em-ployee of the United States or a U.S. agency. If you receive income from Puerto Rican sources that isn't subject to U.S. tax, you must reduce your standard deduction. As a result, the amount of income you must have before you are required to file a U.S. income tax return is lower than the applicable amount in Table 1-1 or Table 1-2. For more information, see Pub. 570.

Individuals With Income From U.S. Possessions

If you had income from Guam, the Common-wealth of the Northern Mariana Islands, Ameri-can Samoa, or the U.S. Virgin Islands, special rules may apply when determining whether you must file a U.S. federal income tax return. In ad-dition, you may have to file a return with the in-dividual island government. See Pub. 570 for more information.

Dependents

If you are a dependent (one who meets the de-pendency tests in chapter 3), see Table 1 -2 to find out whether you must file a return. You must also file if your situation is described in Ta-ble 1-3.

Responsibility of parent. Generally, a child is responsible for filing his or her own tax return and for paying any tax on the return. If a de-pendent child must file an income tax return but can’t file due to age or any other reason, then a parent, guardian, or other legally responsible person must file it for the child. If the child can’t sign the return, the parent or guardian must sign the child's name followed by the words “By (your signature), parent for minor child.”

Child's earnings. Amounts a child earns by performing services are included in his or her gross income and not the gross income of the parent. This is true even if under local law the child's parent has the right to the earnings and may actually have received them. But if the child doesn't pay the tax due on this income, the parent is liable for the tax.

Certain Children Under Age 19 or Full-Time Students

If a child's only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was un-der age 19 at the end of 2020 or was a full-time student under age 24 at the end of 2020, and certain other conditions are met, a parent can elect to include the child's income on the pa-rent's return. If this election is made, the child doesn't have to file a return. See Parent's Elec-tion To Report Child's Interest and Dividends in Pub. 929, Tax Rules for Children and Depend-ents.

Self-Employed Persons

You are self-employed if you:

Carry on a trade or business as a sole pro-prietor,

Are an independent contractor,

Are a member of a partnership, or

Are in business for yourself in any other way.

Self-employment can include work in addi-tion to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job.

You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 or 1040-SR and Schedule SE (Form 1040), Self-Employment Tax, if:

1. Your net earnings from self-employment (excluding church employee income) were $400 or more, or

2. You had church employee income of $108.28 or more. (See Table 1-3.)

Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business.

Employees of foreign governments or in-ternational organizations. If you are a U.S. citizen who works in the United States for an in-ternational organization, a foreign government, or a wholly owned instrumentality of a foreign government, and your employer isn't required to withhold social security and Medicare taxes from your wages, you must include your earn-ings from services performed in the United States when figuring your net earnings from self-employment.

Ministers. You must include income from services you performed as a minister when fig-uring your net earnings from self-employment, unless you have an exemption from self-em-ployment tax. This also applies to Christian Sci-ence practitioners and members of a religious order who have not taken a vow of poverty. For more information, see Pub. 517.

Aliens

Your status as an alien (resident, nonresident, or dual-status) determines whether and how you must file an income tax return.

The rules used to determine your alien sta-tus are discussed in Pub. 519, U.S. Tax Guide for Aliens.

Resident alien. If you are a resident alien for the entire year, you must file a tax return follow-ing the same rules that apply to U.S. citizens. Use the forms discussed in this publication.

Nonresident alien. If you are a nonresident alien, the rules and tax forms that apply to you are different from those that apply to U.S. citi-zens and resident aliens. See Pub. 519 to find out if U.S. income tax laws apply to you and which forms you should file.

Dual-status taxpayer. If you are a resident alien for part of the tax year and a nonresident alien for the rest of the year, you are a dual -sta-tus taxpayer. Different rules apply for each part of the year. For information on dual-status tax-payers, see Pub. 519.

Who Should File

Even if you don't have to file, you should file a federal income tax return to get money back if any of the following conditions apply.

1. You had federal income tax withheld or made estimated tax payments.

2. You qualify for the earned income credit. See Pub. 596, Earned Income Credit (EIC), for more information.

3. You qualify for the additional child tax credit. See chapter 14 for more informa-tion.

4. You qualify for the premium tax credit. See Pub. 974, Premium Tax Credit (PTC), for more information.

5. You qualify for the health coverage tax credit. See Form 8885, Health Coverage Tax Credit, and its instructions, for more information.

6. You qualify for the American opportunity credit. See Pub. 970, Tax Benefits for Ed-ucation, for more information.

7. You qualify for the credit for federal tax on fuels. See chapter 13 for more informa-tion.

Form 1040 or 1040-SR

Use Form 1040 or 1040-SR to file your return. (But also see Why Should I File Electronically, later.)

You can use Form 1040 or 1040 -SR to re-port all types of income, deductions, and cred-its.

Why Should I File Electronically?

Electronic Filing

If your adjusted gross income (AGI) is less than a certain amount, you are eligible for Free File, a free tax software service offered by IRS part-ners, to prepare and e-file your return for free. If your income is over the amount, you are still eli-gible for Free File Fillable Forms, an electronic version of IRS paper forms. Table 1-4 lists the free ways to electronically file your return.

IRS e-file uses automa- tion to replace most of the manual steps needed to process paper returns. As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. However, as with a paper return, you are responsible for making sure your return contains accurate information and is filed on

time.

Chapter 1Filing InformationPage 7

Table 1-2.2020 Filing Requirements for Dependents

See chapter 3 to find out if someone can claim you as a dependent.

If your parents (or someone else) can claim you as a dependent, use this table to see if you must file a return. (See Table 1-3 for other situations when you must file.)

In this table, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. (See Scholarships and fellowships in chapter 8.) Gross income is the total of your earned and unearned income.

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

No.You must file a return if any of the following apply.

Your unearned income was more than $1,100.

Your earned income was more than $12,400.

Your gross income was more than the larger of:

$1,100, or

Your earned income (up to $12,050) plus $350.

Yes. You must file a return if any of the following apply.

Your unearned income was more than $2,750 ($4,400 if 65 or older and blind).

Your earned income was more than $14,050 ($15,700 if 65 or older and blind).

Your gross income was more than the larger of:

$2,750 ($4,400 if 65 or older and blind), or

Your earned income (up to $12,050) plus $2,000 ($3,650 if 65 or older and blind).

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

No.You must file a return if any of the following apply.

Your unearned income was more than $1,100.

Your earned income was more than $12,400.

Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.

Your gross income was more than the larger of:

$1,100, or

Your earned income (up to $12,050) plus $350.

Yes. You must file a return if any of the following apply.

Your unearned income was more than $2,400 ($3,700 if 65 or older and blind).

Your earned income was more than $13,700 ($15,000 if 65 or older and blind).

Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.

Your gross income was more than the larger of:

$2,400 ($3,700 if 65 or older and blind), or

Your earned income (up to $12,050) plus $1,650 ($2,950 if 65 or older and blind).

income tax return, if applicable. If you're filing jointly, your electronic return must also include your spouse's PIN; last name; date of birth; IP PIN, if applicable; and AGI, if applicable, in or-der to be considered validly signed. Don't use AGI from an amended return (Form 1040-X) or a math error correction made by the IRS. AGI is the amount shown on your 2019 Form 1040 or Form 1040-SR, line 8b. If you don't have your 2019 income tax return, you can request a tran-script by using our automated self-service tool. Go to IRS.gov/Transcript. (If you filed electroni-cally last year, you, and your spouse if filing jointly, may use your prior year PIN to verify your identity instead of your prior year AGI. The prior year PIN is the five-digit PIN you used to electronically sign your 2019 return.) You will also be prompted to enter your date of birth.

You can’t use the Self-Select PIN

method if you are a first-time filer under CAUTION age 16 at the end of 2020.

Practitioner PIN. The Practitioner PIN method allows you to authorize your tax practitioner to enter or generate your PIN. Your electronic re-turn is considered a validly signed return only when it includes your PIN; last name; date of birth; and IP PIN, if applicable. If you’re filing jointly, your electronic return must also include your spouse’s PIN; last name; date of birth; and IP PIN, if applicable, in order to be considered a validly signed return. The practitioner can pro-vide you with details.

Form 8453. You must send in a paper Form 8453 if you have to attach certain forms or other documents that can’t be electronically filed. For details, see Form 8453. For more details, visit IRS.gov/efile.

Identity Protection PIN. If the IRS gave you an identity protection personal identification number (IP PIN) because you were a victim of identity theft, enter it in the spaces provided on your tax form. If the IRS hasn’t given you this type of number, leave these spaces blank. For more information, see the Instructions for Forms 1040 and 1040-SR.

Power of attorney. If an agent is signing your return for you, a power of attorney (POA) must be filed. Attach the POA to Form 8453 and file it using that form's instructions. See Signatures, later, for more information on POAs.

If your return is filed with IRS e-file, you will re-ceive an acknowledgment that your return was received and accepted. If you owe tax, you can e-file and pay electronically. The IRS has pro-cessed more than one billion e-filed returns safely and securely. Using e-file doesn't affect your chances of an IRS examination of your re-turn.

Requirements for an electronic return sig-nature. To file your return electronically, you must sign the return electronically using a per-sonal identification number (PIN). If you are fil-ing online, you must use a Self-Select PIN. For 2020, if we issued you an identity protection personal identification number (IP PIN) (as de-scribed in more detail below), all six digits of your IP PIN must appear in the IP PIN spaces provided next to the space for your occupation for your electronic signature to be complete. Failure to include an issued IP PIN on the elec-

Page 8Chapter 1Filing Information

tronic return will result in an invalid signature and a rejected return. If you are filing a joint re-turn and both taxpayers were issued an IP PIN, enter both IP PINs in the spaces provided. If you are filing electronically using a tax practi-tioner, you can use a Self-Select PIN or a Prac-titioner PIN.

Self-Select PIN. The Self-Select PIN method allows you to create your own PIN. If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures.

A PIN is any combination of five digits you choose except five zeros. If you use a PIN, there is nothing to sign and nothing to mail—not even your Forms W-2.

Your electronic return is considered a valid signed return only when it includes your PIN; last name; date of birth; IP PIN, if applicable; and AGI from your originally filed 2019 federal

State returns. In most states, you can file an electronic state return simultaneously with your federal return. For more information, check with your local IRS office, state tax agency, tax pro-fessional, or the IRS website at IRS.gov/efile.

Refunds. You can have a refund check mailed to you, or you can have your refund deposited directly to your checking or savings account or split among two or three accounts. With e-file, your refund will be issued faster than if you filed on paper.

As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain other fed-eral nontax debts, such as student loans. See Offset against debts under Refunds, later.

Table 1-3. Other Situations When You Must File a 2020 Return

You must file a return if any of the seven conditions below apply for 2020.

1. You owe any special taxes, including any of the following.

a. Alternative minimum tax.

b. Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a return only because you owe this tax, you can file Form 5329 by itself.

c. Household employment taxes. But if you are filing a return only because you owe this tax, you can file Schedule H by itself.

d. Social security and Medicare tax on tips you didn't report to your employer or on wages you received from an employer who didn't withhold these taxes.

e. Write-in taxes, including uncollected social security and Medicare or RRTA tax on tips you reported to your employer on group-term life insurance and additional taxes on health savings accounts. See the instructions for Schedule 2 (Form 1040), line 8.

f. Recapture taxes. See the instructions for Forms 1040 and 1040-SR, line 16, and Schedule 2 (Form 1040), lines 7b and 8.

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

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

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

5. Advance payments of the premium tax credit were made for you, your spouse, or a dependent who enrolled in coverage through the Marketplace. You or whoever enrolled you should have received Form(s) 1095-A showing the amount of the advance payments.

6. Advance payments of the health coverage tax credit were made for you, your spouse, or a dependent. You or whoever enrolled you should have received Form(s) 1099-H showing the amount of the advance payments.

7. You are required to include amounts in income under section 965 or you have a net tax liability under section 965 that you are paying in installments under section 965(h) or deferred by making an election under section 965(i).

Refund inquiries. Information about your re-turn will generally be available within 24 hours after the IRS receives your e-filed return. See Refund Information, later.

Amount you owe. To avoid late-payment pen-alties and interest, pay your taxes in full by April 15, 2021. See How To Pay, later, for informa-tion on how to pay the amount you owe.

Using Your Personal Computer

You can file your tax return in a fast, easy, and convenient way using your personal computer. A computer with In-

ternet access and tax preparation software are all you need. Best of all, you can e-file from the comfort of your home 24 hours a day, 7 days a week.

Table 1-4. Free Ways To e-file

Use Free File for free tax software and free e-file.

IRS partners offer name-brand products for free.

Many taxpayers are eligible for Free File software.

Everyone is eligible for Free File Fillable Forms, an electronic version of IRS paper forms.

Free File software and Free File Fillable Forms are available only at IRS.gov/FreeFile. Use VITA/TCE for free tax help from volunteers and free e-file.

Volunteers prepare your return and e-file it for free.

Some sites also offer do-it-yourself software.

You are eligible based either on your income or age.

Sites are located nationwide. Find one near you by visiting IRS.gov/VITA.

IRS-approved tax preparation software is avail-able for online use on the Internet, for download from the Internet, and in retail stores. For infor-mation, visit IRS.gov/efile.

Through Employers and Financial Institutions

Free Help With Your Return

The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who gen-erally make $57,000 or less, persons with disa-bilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. The Tax Counseling for the Elderly (TCE) pro-gram offers free tax help for all taxpayers, par-

prepare and e-file your federal tax return for free.

•	VITA. Go to IRS.gov/VITA, download the
	free IRS2Go
			app, or call 800-906-9887 to
	find the nearest VITA location for free tax
•	return preparation.
	TCE. Go to IRS.gov/TCE, download the
	free IRS2Go	app, or call		888-227-7669 to

Some businesses offer free e-file to their em-	ticularly those who are 60 years of age and
ployees, members, or customers. Others offer it	older. TCE volunteers specialize in answering
for a fee. Ask your employer or financial institu-	questions about pensions and retirement-rela-
tion if they offer IRS e-file as an employee,	ted issues unique to seniors.
member, or customer benefit.		You can go to IRS.gov to see your options
	for preparing and filing your return, which in-
	clude the following.
	•	Free File. Go to IRS.gov/FreeFile. See if
		you qualify to use
			brand-name software to

find the nearest TCE location for free tax return preparation.

Using a Tax Professional

Many tax professionals electronically file tax re-turns for their clients. You may personally enter your PIN or complete Form 8879, IRS e-file Sig-nature Authorization, to authorize the tax pro-fessional to enter your PIN on your return.

Chapter 1Filing InformationPage 9

Note. Tax professionals may charge a fee for IRS e-file. Fees can vary depending on the professional and the specific services rendered.

When Do I Have To File?

April 15, 2021, is the due date for filing your 2020 income tax return if you use the calendar year. For a quick view of due dates for filing a return with or without an extension of time to file

Table 1-5.When To File Your 2020 Return

For U.S. citizens and residents who file returns on a calendar year basis.

(discussed later), see Table 1-5.

If you use a fiscal year (a year ending on the last day of any month except December, or a 52-53-week year), your income tax return is due by the 15th day of the 4th month after the close of your fiscal year.

When the due date for doing any act for tax purposes—filing a return, paying taxes, etc.—falls on a Saturday, Sunday, or legal holi-day, the due date is delayed until the next busi-ness day.

Filing paper returns on time. Your paper re-turn is filed on time if it is mailed in an envelope that is properly addressed, has enough post-age, and is postmarked by the due date. If you send your return by registered mail, the date of the registration is the postmark date. The regis-tration is evidence that the return was delivered. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date. The postmarked certified mail receipt is evi-dence that the return was delivered.

Private delivery services. If you use a pri-vate delivery service designated by the IRS to send your return, the postmark date is generally the date the private delivery service records in its database or marks on the mailing label. The private delivery service can tell you how to get written proof of this date.

The following are designated private deliv-ery services.

United Parcel Service (UPS): UPS Next Day Air Early A.M., UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Ex-press.

Federal Express (FedEx): FedEx First Overnight, FedEx Priority Overnight, Fe-dEx Standard Overnight, FedEx 2 Day, Fe-dEx International Next Flight Out, FedEx International Priority, FedEx International First, and FedEx International Economy.

DHL Express 9:00, DHL Express 10:30, DHL Express 12:00, DHL Express World-wide, DHL Express Envelope, DHL Import Express 10:30, DHL Import Express 12:00, and DHL Import Express Worldwide.

To check for any updates to the list of desig-nated private delivery services, go to IRS.gov/ PDS. For the IRS mailing addresses to use if you’re using a private delivery service, go to IRS.gov/PDSStreetAddresses.

The private delivery service can tell you how to get written proof of the mailing date.

Filing electronic returns on time. If you use IRS e-file, your return is considered filed on

Page 10Chapter 1Filing Information

time if the authorized electronic return transmit-ter postmarks the transmission by the due date. An authorized electronic return transmitter is a participant in the IRS e-file program that trans-mits electronic tax return information directly to the IRS.

The electronic postmark is a record of when the authorized electronic return transmitter re-ceived the transmission of your electronically filed return on its host system. The date and time in your time zone controls whether your electronically filed return is timely.

Filing late. If you don't file your return by the due date, you may have to pay a failure-to-file penalty and interest. For more information, see Penalties, later. Also see Interest under Amount You Owe, later.

If you were due a refund but you didn't file a return, you must generally file within 3 years from the date the return was due (including ex-tensions) to get that refund.

Nonresident alien. If you are a nonresident alien and earn wages subject to U.S. income tax withholding, your 2020 U.S. income tax re-turn (Form 1040-NR) is due by:

April 15, 2021, if you use a calendar year; or

The 15th day of the 4th month after the end of your fiscal year, if you use a fiscal year.

If you don't earn wages subject to U.S. in-come tax withholding, your return is due by:

June 15, 2021, if you use a calendar year; or

The 15th day of the 6th month after the end of your fiscal year, if you use a fiscal year.

See Pub. 519 for more filing information.

Filing for a decedent. If you must file a final income tax return for a taxpayer who died dur-ing the year (a decedent), the return is due by the 15th day of the 4th month after the end of the decedent's normal tax year. See Pub. 559.

Extensions of Time To File

You may be able to get an extension of time to file your return. There are three types of situa-tions where you may qualify for an extension.

Automatic extensions.

You are outside the United States.

You are serving in a combat zone.

Automatic Extension

If you can’t file your 2020 return by the due date, you may be able to get an automatic 6-month extension of time to file.

Example. If your return is due on April 15, 2021, you will have until October 15, 2021, to file.

If you don't pay the tax due by the regu-

lar due date (April 15 for most taxpay-CAUTION ers), you will owe interest. You may also be charged penalties, discussed later.

How to get the automatic extension. You can get the automatic extension by:

1. Using IRS e-file (electronic filing), or

2. Filing a paper form.

E-file options. There are two ways you can use e-file to get an extension of time to file. Complete Form 4868 to use as a worksheet. If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. If you e-file Form 4868 to the IRS, don't send a paper Form 4868.

E-file using your personal computer or a tax professional. You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. Free File and Free File Fillable Forms, both available at IRS.gov, allow you to prepare and e-file Form 4868 for free. You will need to pro-vide certain information from your 2019 tax re-turn. If you wish to make a payment by direct transfer from your bank account, see Pay online under How To Pay, later in this chapter.

E-file and pay by credit or debit card or by direct transfer from your bank account. You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card or by direct transfer from your bank account. You can do this by phone or over the Internet. You don't file Form 4868. See Pay on-line under How To Pay, later in this chapter.

Filing a paper Form 4868. You can get an ex-tension of time to file by filing a paper Form 4868. If you are a fiscal year taxpayer, you must file a paper Form 4868. Mail it to the address shown in the form instructions.

If you want to make a payment with the form, make your check or money order payable to “United States Treasury.” Write your SSN, daytime phone number, and “2020 Form 4868” on your check or money order.

When to file. You must request the automatic extension by the due date for your return. You can file your return any time before the 6-month extension period ends.

When you file your return. Enter any pay-ment you made related to the extension of time to file on Schedule 3 (Form 1040), line 9.

Individuals Outside the United States

You are allowed an automatic 2-month exten-sion, without filing Form 4868 (until June 15, 2021, if you use the calendar year), to file your 2020 return and pay any federal income tax due if:

1. You are a U.S. citizen or resident; and

2. On the due date of your return:

a. You are living outside the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Pu-erto Rico; or

b. You are in military or naval service on duty outside the United States and Puerto Rico.

However, if you pay the tax due after the regular due date (April 15 for most taxpayers), interest will be charged from that date until the date the tax is paid.

If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. See Individuals Serving in Combat Zone, later, for special rules that apply to you.

Married taxpayers. If you file a joint return, only one spouse has to qualify for this auto-matic extension. If you and your spouse file separate returns, the automatic extension ap-plies only to the spouse who qualifies.

How to get the extension. To use this auto-matic extension, you must attach a statement to your return explaining what situation qualified you for the extension. (See the situations listed under (2), earlier.)

Extensions beyond 2 months. If you can’t file your return within the automatic 2-month exten-sion period, you may be able to get an addi-tional 4 -month extension, for a total of 6 months. File Form 4868 and check the box on line 8.

No further extension. An extension of more than 6 months will generally not be granted. However, if you are outside the United States and meet certain tests, you may be granted a longer extension. For more information, see When To File and Pay in Pub. 54.

Individuals Serving in Combat Zone

The deadline for filing your tax return, paying any tax you may owe, and filing a claim for re-fund is automatically extended if you serve in a combat zone. This applies to members of the Armed Forces, as well as merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces in support of the Armed Forces.

Combat zone. A combat zone is any area the President of the United States designates by executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to be a combat zone on the dates the President designates by executive or-der. For purposes of the automatic extension, the term “combat zone” includes the following areas.

1. The Arabian peninsula area, effective Jan-uary 17, 1991.

2. The Kosovo area, effective March 24, 1999.

3. The Afghanistan area, effective Septem-ber 19, 2001.

See Pub. 3 for more detailed information on the locations comprising each combat zone. Pub. 3 also has information about other tax ben-efits available to military personnel serving in a combat zone.

Extension period. The deadline for filing your return, paying any tax due, filing a claim for re-fund, and taking other actions with the IRS is extended in two steps. First, your deadline is extended for 180 days after the later of:

1. The last day you are in a combat zone or the last day the area qualifies as a combat zone, or

2. The last day of any continuous qualified hospitalization (defined later) for injury from service in the combat zone.

Second, in addition to the 180 days, your deadline is also extended by the number of days you had left to take action with the IRS when you entered the combat zone. For exam-ple, you have 31/2 months (January 1–April 15) to file your tax return. Any days left in this period when you entered the combat zone (or the en-tire 31/2 months if you entered it before the be-ginning of the year) are added to the 180 days. See Extension of Deadlines in Pub. 3 for more information.

The rules on the extension for filing your re-turn also apply when you are deployed outside the United States (away from your permanent duty station) while participating in a designated contingency operation.

Qualified hospitalization. The hospitalization must be the result of an injury received while serving in a combat zone or a contingency op-eration. Qualified hospitalization means:

Any hospitalization outside the United States, and

Up to 5 years of hospitalization in the Uni-ted States.

See Pub. 3 for more information on qualified hospitalizations.

How Do I Prepare My Return?

This section explains how to get ready to fill in your tax return and when to report your income and expenses. It also explains how to complete

certain sections of the form. You may find Ta-ble 1-6 helpful when you prepare your paper re-turn.

Table 1-6. Six Steps for Preparing

Your Paper Return

— Get your records together for income and expenses.

— Get the forms, schedules, and publications you need.

— Fill in your return.

— Check your return to make sure it is correct.

— Sign and date your return.

— Attach all required forms and schedules.

Electronic returns. For information you may find useful in preparing an electronic return, see Why Should I File Electronically, earlier.

Substitute tax forms. You can’t use your own version of a tax form unless it meets the re-quirements explained in Pub. 1167.

Form W-2. If you were an employee, you should receive Form W-2 from your employer. You will need the information from this form to prepare your return. See Form W-2 under Credit for Withholding and Estimated Tax for 2020 in chapter 4.

Your employer is required to provide or send Form W-2 to you no later than January 31, 2021. If it is mailed, you should allow adequate time to receive it before contacting your em-ployer. If you still don't get the form by February 15, the IRS can help you by requesting the form from your employer. When you request IRS help, be prepared to provide the following infor-mation.

Your name, address (including ZIP code), and phone number.

Your SSN.

Your dates of employment.

Your employer's name, address (including ZIP code), and phone number.

Form 1099. If you received certain types of in-come, you may receive a Form 1099. For exam-ple, if you received taxable interest of $10 or more, the payer is required to provide or send Form 1099 to you no later than January 31, 2021 (or by February 15, 2021, if furnished by a broker). If it is mailed, you should allow ade-quate time to receive it before contacting the payer. If you still don't get the form by February 15 (or by March 1, 2021, if furnished by a broker), call the IRS for help.

When Do I Report My Income and Expenses?

You must figure your taxable income on the ba-sis of a tax year. A “tax year” is an annual ac-counting period used for keeping records and reporting income and expenses. You must ac-count for your income and expenses in a way

Chapter 1Filing InformationPage 11

that clearly shows your taxable income. The way you do this is called an accounting method. This section explains which accounting periods and methods you can use.

Accounting Periods

Most individual tax returns cover a calendar year—the 12 months from January 1 through December 31. If you don't use a calendar year, your accounting period is a fiscal year. A regu-lar fiscal year is a 12-month period that ends on the last day of any month except December. A 52-53-week fiscal year varies from 52 to 53 weeks and always ends on the same day of the week.

You choose your accounting period (tax year) when you file your first income tax return. It can’t be longer than 12 months.

More information. For more information on accounting periods, including how to change your accounting period, see Pub. 538.

Accounting Methods

Your accounting method is the way you account for your income and expenses. Most taxpayers use either the cash method or an accrual method. You choose a method when you file your first income tax return. If you want to change your accounting method after that, you must generally get IRS approval. Use Form 3115 to request an accounting method change.

Cash method. If you use this method, report all items of income in the year in which you ac-tually or constructively receive them. Generally, you deduct all expenses in the year you actually pay them. This is the method most individual taxpayers use.

Constructive receipt. Generally, you con-structively receive income when it is credited to your account or set apart in any way that makes it available to you. You don't need to have phys-ical possession of it. For example, interest credited to your bank account on December 31, 2020, is taxable income to you in 2020 if you could have withdrawn it in 2020 (even if the amount isn't entered in your records or with-drawn until 2021).

Garnished wages. If your employer uses your wages to pay your debts, or if your wages are attached or garnished, the full amount is constructively received by you. You must in-clude these wages in income for the year you would have received them.

Debts paid for you. If another person can-cels or pays your debts (but not as a gift or loan), you have constructively received the amount and must generally include it in your gross income for the year. See Canceled Debts in chapter 8 for more information.

Payment to third party. If a third party is paid income from property you own, you have constructively received the income. It is the same as if you had actually received the income and paid it to the third party.

Payment to an agent. Income an agent re-ceives for you is income you constructively re-ceived in the year the agent receives it. If you indicate in a contract that your income is to be

Page 12Chapter 1Filing Information

paid to another person, you must include the amount in your gross income when the other person receives it.

Check received or available. A valid check that was made available to you before the end of the tax year is constructively received by you in that year. A check that was “made available to you” includes a check you have already re-ceived, but not cashed or deposited. It also in-cludes, for example, your last paycheck of the year that your employer made available for you to pick up at the office before the end of the year. It is constructively received by you in that year whether or not you pick it up before the end of the year or wait to receive it by mail after the end of the year.

No constructive receipt. There may be facts to show that you didn't constructively re-ceive income.

Example. Alice Johnson, a teacher, agreed to her school board's condition that, in her ab-sence, she would receive only the difference between her regular salary and the salary of a substitute teacher hired by the school board. Therefore, Alice didn't constructively receive the amount by which her salary was reduced to pay the substitute teacher.

Accrual method. If you use an accrual method, you generally report income when you earn it, rather than when you receive it. You generally deduct your expenses when you incur them, rather than when you pay them.

Income paid in advance. An advance pay-ment of income is generally included in gross income in the year you receive it. Your method of accounting doesn't matter as long as the in-come is available to you. An advance payment may include rent or interest you receive in ad-vance and pay for services you will perform later.

A limited deferral until the next tax year may be allowed for certain advance payments. See Pub. 538 for specific information.

Additional information. For more information on accounting methods, including how to change your accounting method, see Pub. 538.

Social Security Number (SSN)

You must enter your SSN on your return. If you are married, enter the SSNs for both you and your spouse, whether you file jointly or sepa-rately.

If you are filing a joint return, include the SSNs in the same order as the names. Use this same order in submitting other forms and docu-ments to the IRS.

If you, or your spouse if filing jointly,

don't have an SSN (or ITIN) issued on CAUTION or before the due date of your 2020 re-turn (including extensions), you can't claim cer-tain tax benefits on your original or an amended 2020 return.

Check that both the name and SSN on your Form 1040 or 1040-SR, W-2, and 1099 agree with your social security card. If they don't, cer-tain deductions and credits on your Form 1040

or 1040-SR may be reduced or disallowed and you may not receive credit for your social secur-ity earnings. If your Form W-2 shows an incor-rect SSN or name, notify your employer or the form-issuing agent as soon as possible to make sure your earnings are credited to your social security record. If the name or SSN on your so-cial security card is incorrect, call the Social Se-curity Administration (SSA) at 800-772-1213.

Name change. If you changed your name be-cause of marriage, divorce, etc., be sure to re-port the change to your local SSA office before filing your return. This prevents delays in pro-cessing your return and issuing refunds. It also safeguards your future social security benefits.

Dependent's SSN. You must provide the SSN of each dependent you claim, regardless of the dependent's age. This requirement applies to all dependents (not just your children) claimed on your tax return.

Your child must have an SSN valid for

employment issued before the due CAUTION date of your 2020 return (including ex-tensions) to be considered a qualifying child for certain tax benefits on your original or amended 2020 return. See chapter 14 and Pub. 596.

Exception. If your child was born and died in 2020 and didn't have an SSN, enter “DIED” in column (2) of the Dependents section of Form 1040 or 1040-SR and include a copy of the child's birth certificate, death certificate, or hos-pital records. The document must show that the child was born alive.

No SSN. File Form SS -5, Application for a So-cial Security Card, with your local SSA office to get an SSN for yourself or your dependent. It usually takes about 2 weeks to get an SSN. If you or your dependent isn't eligible for an SSN, see Individual taxpayer identification number (ITIN), later.

If you are a U.S. citizen or resident alien, you must show proof of age, identity, and citizen-ship or alien status with your Form SS-5. If you are 12 or older and have never been assigned an SSN, you must appear in person with this proof at an SSA office.

Form SS-5 is available at any SSA office, on the Internet at SSA.gov, or by calling 800-772-1213. If you have any questions about which documents you can use as proof of age, identity, or citizenship, contact your SSA office.

If your dependent doesn't have an SSN by the time your return is due, you may want to ask for an extension of time to file, as explained ear-lier under When Do I Have To File.

If you don't provide a required SSN or if you provide an incorrect SSN, your tax may be in-creased and any refund may be reduced.

Adoption taxpayer identification number (ATIN). If you are in the process of adopting a child who is a U.S. citizen or resident and can’t get an SSN for the child until the adoption is fi-nal, you can apply for an ATIN to use instead of an SSN.

File Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adop-tions, with the IRS to get an ATIN if all of the fol-lowing are true.

You have a child living with you who was placed in your home for legal adoption.

You can’t get the child's existing SSN even though you have made a reasonable at-tempt to get it from the birth parents, the placement agency, and other persons.

You can’t get an SSN for the child from the SSA because, for example, the adoption isn't final.

You are eligible to claim the child as a de-pendent on your tax return.

After the adoption is final, you must apply for an SSN for the child. You can’t continue using the ATIN.

See Form W-7A for more information.

Nonresident alien spouse. If your spouse is a nonresident alien, your spouse must have either an SSN or an ITIN if:

You file a joint return, or

Your spouse is filing a separate return.

If your spouse isn't eligible for an SSN, see the following discussion on ITINs.

Individual taxpayer identification number (ITIN). The IRS will issue you an ITIN if you are a nonresident or resident alien and you don't have and aren’t eligible to get an SSN. This also applies to an alien spouse or dependent. To ap-ply for an ITIN, file Form W-7 with the IRS. It usually takes about 7 weeks to get an ITIN. En-ter the ITIN on your tax return wherever an SSN is requested.

Make sure your ITIN hasn’t expired. If you haven't used your ITIN on a U.S. tax return at least once in the last 3 years, or if your ITIN has the middle digits 88, (9NN-88-NNNN) or if your ITIN has the middle digits 90, 91, 92, 94, 95, 96, 97, 98, or 99 and was assigned before 2013, it expired at the end of 2020 and must be re-newed if you need to file a U.S. federal tax re-turn in 2021. You don't need to renew your ITIN if you don't need to file a federal tax return. You can find more information at IRS.gov/ITIN.

ITINs with middle digits 70 through 87 TIP have expired and must also be re-newed if you need to file a tax return in

2021 and haven't already renewed the ITIN.

If you are applying for an ITIN for your-TIP self, your spouse, or a dependent in or-der to file your tax return, attach your completed tax return to your Form W-7. See the Form W-7 instructions for how and where to file.

You can’t e-file a return using an ITIN in

the calendar year the ITIN is issued; CAUTION however, you can e-file returns in the following years.

ITIN for tax use only. An ITIN is for federal tax use only. It doesn't entitle you to social se-curity benefits or change your employment or immigration status under U.S. law.

Penalty for not providing social security number. If you don't include your SSN or the SSN of your spouse or dependent as required,

you may have to pay a penalty. See the discus-sion on Penalties, later, for more information.

SSN on correspondence. If you write to the IRS about your tax account, be sure to include your SSN (and the name and SSN of your spouse, if you filed a joint return) in your corre-spondence. Because your SSN is used to iden-tify your account, this helps the IRS respond to your correspondence promptly.

Presidential Election Campaign Fund

This fund helps pay for Presidential election campaigns. The fund also helps pay for pedia-tric medical research. If you want $3 to go to this fund, check the box. If you are filing a joint return, your spouse can also have $3 go to the fund. If you check the box, your tax or refund won't change.

Computations

The following information may be useful in mak-ing the return easier to complete.

Rounding off dollars. You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 be-comes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

If you are entering amounts that include cents, make sure to include the decimal point. There is no cents column on Form 1040 or 1040-SR.

Equal amounts. If you are asked to enter the smaller or larger of two equal amounts, enter that amount.

Negative amounts. If you file a paper return and you need to enter a negative amount, put the amount in parentheses rather than using a minus sign. To combine positive and negative amounts, add all the positive amounts together and then subtract the negative amounts.

Attachments

Depending on the form you file and the items reported on your return, you may have to com-plete additional schedules and forms and attach them to your paper return.

You may be able to file a paperless re-TIP turn using IRS e-file. There's nothing to attach or mail, not even your Forms W-2. See Why Should I File Electronically, ear-

lier.

Form W-2. Form W-2 is a statement from your employer of wages and other compensation paid to you and taxes withheld from your pay. You should have a Form W-2 from each em-ployer. If you file a paper return, be sure to at-tach a copy of Form W-2 in the place indicated on your return. For more information, see Form W-2 in chapter 4.

Form 1099-R. If you received a Form 1099-R showing federal income tax withheld, and you file a paper return, attach a copy of that form in the place indicated on your return.

Form 1040 or 1040-SR. If you file a paper re-turn, attach any forms and schedules behind Form 1040 or 1040-SR in order of the “Attach-ment Sequence No.” shown in the upper right corner of the form or schedule. Then, arrange all other statements or attachments in the same order as the forms and schedules they relate to and attach them last. Don't attach items unless required to do so.

Third Party Designee

If you want to allow your preparer, a friend, a family member, or any other person you choose to discuss your 2020 tax return with the IRS, check the “Yes” box in the “Third Party Desig-nee” area of your return. Also, enter the design-ee's name, phone number, and any five digits the designee chooses as his or her personal identification number (PIN).

If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any ques-tions that arise during the processing of your re-turn. You are also authorizing the designee to:

Give information that is missing from your return to the IRS;

Call the IRS for information about the pro-cessing of your return or the status of your refund or payments;

Receive copies of notices or transcripts re-lated to your return, upon request; and

Respond to certain IRS notices about math errors, offsets (see Refunds, later), and re-turn preparation.

You aren't authorizing the designee to re-ceive any refund check, bind you to anything (including any additional tax liability), or other-wise represent you before the IRS. If you want to expand the designee's authorization, see Pub. 947.

The authorization will automatically end no later than the due date (without any extensions) for filing your 2021 tax return. This is April 18, 2022, for most people.

See your form instructions for more informa-tion.

Signatures

You must sign and date your return. If you file a joint return, both you and your spouse must sign the return, even if only one of you had in-come.

If you file a joint return, both spouses

are generally liable for the tax, and the CAUTION entire tax liability may be assessed against either spouse. See chapter 2.

Your return isn't considered a valid return unless you sign it in accordance with the re-quirements in the instructions for your return.

You must handwrite your signature on your return if you file it on paper. Digital, electronic,

Chapter 1Filing InformationPage 13

or typed-font signatures are not valid signatures for Forms 1040 or 1040-SR filed on paper.

If you electronically file your return, you can use an electronic signature to sign your return in accordance with the requirements contained in the instructions for your return.

Failure to sign your return in accordance with these requirements may prevent you from obtaining a refund.

Enter your occupation. If you file a joint re-turn, enter both your occupation and your spou-se's occupation.

When someone can sign for you. You can appoint an agent to sign your return if you are:

1. Unable to sign the return because of dis-ease or injury,

2. Absent from the United States for a contin-uous period of at least 60 days before the due date for filing your return, or

3. Given permission to do so by the IRS of-fice in your area.

Power of attorney. A return signed by an agent in any of these cases must have a power of attorney (POA) attached that authorizes the agent to sign for you. You can use a POA that states that the agent is granted authority to sign the return, or you can use Form 2848. Part I of Form 2848 must state that the agent is granted authority to sign the return.

Court-appointed conservator, guardian, or other fiduciary. If you are a court-appointed conservator, guardian, or other fiduciary for a mentally or physically incompetent individual who has to file a tax return, sign your name for the individual. File Form 56.

Unable to sign. If the taxpayer is mentally competent but physically unable to sign the re-turn or POA, a valid “signature” is defined under state law. It can be anything that clearly indi-cates the taxpayer's intent to sign. For example, the taxpayer's “X” with the signatures of two wit-nesses might be considered a valid signature under a state's law.

Spouse unable to sign. If your spouse is un-able to sign for any reason, see Signing a joint return in chapter 2.

Child's return. If a child has to file a tax return but can’t sign the return, the child's parent, guardian, or another legally responsible person must sign the child's name, followed by the words “By (your signature), parent for minor child.”

Paid Preparer

Generally, anyone you pay to prepare, assist in preparing, or review your tax return must sign it and fill in the other blanks, including their Pre-parer Tax Identification Number (PTIN), in the paid preparer's area of your return.

Many preparers are required to e-file the tax returns they prepare. They sign these e-filed re-turns using their tax preparation software. How-ever, you can choose to have your return com-pleted on paper if you prefer. In that case, the paid preparer can sign the paper return man-ually or use a rubber stamp or mechanical de-vice. The preparer is personally responsible for affixing his or her signature to the return.

Page 14Chapter 1Filing Information

If the preparer is self-employed (that is, not employed by any person or business to prepare the return), he or she should check the self-em-ployed box in the “Paid Preparer Use Only” space on the return.

The preparer must give you a copy of your return in addition to the copy filed with the IRS.

If you prepare your own return, leave this area blank. If another person prepares your re-turn and doesn't charge you, that person shouldn't sign your return.

If you have questions about whether a pre-parer must sign your return, contact any IRS of-fice.

Refunds

When you complete your return, you will deter-mine if you paid more income tax than you owed. If so, you can get a refund of the amount you overpaid or you can choose to apply all or part of the overpayment to your next year's (2021) estimated tax.

If you choose to have a 2020 overpay-

ment applied to your 2021 estimated CAUTION tax, you can’t change your mind and have any of it refunded to you after the due date (without extensions) of your 2020 return.

Follow the Instructions for Forms 1040 and 1040-SR to complete the entries to claim your refund and/or to apply your overpayment to your 2021 estimated tax.

If your refund for 2020 is large, you TIP may want to decrease the amount of income tax withheld from your pay in

2021. See chapter 4 for more information. _DIRECT_DEPOSITInstead of getting a pa-

Simple. Safe. Secure. per check, you may be able to have your refund deposited directly into your checking or savings account, including an individual retirement arrangement (IRA). Follow the Instructions for Forms 1040 and 1040-SR to request direct deposit. If the direct deposit can’t be done, the IRS will send a check instead.

Don't request a deposit of any part of your refund to an account that isn't in your name. Don't allow your tax preparer to deposit any part of your refund into his or her account. The num-ber of direct deposits to a single account or pre-paid debit card is limited to three refunds a year. After this limit is exceeded, paper checks will be sent instead. Learn more at IRS.gov/ Individuals/Direct-Deposit-Limits.

IRA. You can have your refund (or part of it) di-rectly deposited to a traditional IRA, Roth IRA, or SEP-IRA, but not a SIMPLE IRA. You must establish the IRA at a bank or financial institu-tion before you request direct deposit.

TreasuryDirect®. You can request a deposit of your refund to a TreasuryDirect® online ac-count to buy U.S. Treasury marketable securi-ties and savings bonds. For more information, go to http://go.usa.gov/3KvcP.

Split refunds. If you choose direct deposit, you may be able to split the refund and have it deposited among two or three accounts or buy up to $5,000 in paper series I savings bonds. Complete Form 8888 and attach it to your re-turn.

Overpayment less than one dollar. If your overpayment is less than one dollar, you won't get a refund unless you ask for it in writing.

Cashing your refund check. Cash your tax refund check soon after you receive it. Checks expire the last business day of the 12th month of issue.

If your check has expired, you can apply to the IRS to have it reissued.

Refund more or less than expected. If you receive a check for a refund you aren’t entitled to, or for an overpayment that should have been credited to estimated tax, don't cash the check. Call the IRS.

If you receive a check for more than the re-fund you claimed, don't cash the check until you receive a notice explaining the difference.

If your refund check is for less than you claimed, it should be accompanied by a notice explaining the difference. Cashing the check doesn't stop you from claiming an additional amount of refund.

If you didn't receive a notice and you have any questions about the amount of your refund, you should wait 2 weeks. If you still haven’t re-ceived a notice, call the IRS.

Offset against debts. If you are due a refund but haven’t paid certain amounts you owe, all or part of your refund may be used to pay all or part of the past-due amount. This includes past-due federal income tax, other federal debts (such as student loans), state income tax, child and spousal support payments, and state unemployment compensation debt. You will be notified if the refund you claimed has been off-set against your debts.

Joint return and injured spouse. When a joint return is filed and only one spouse owes a past-due amount, the other spouse can be con-sidered an injured spouse. An injured spouse should file Form 8379, Injured Spouse Alloca-tion, if both of the following apply and the spouse wants a refund of his or her share of the overpayment shown on the joint return.

1. You aren’t legally obligated to pay the past-due amount.

2. You made and reported tax payments (such as federal income tax withheld from your wages or estimated tax payments), or claimed a refundable tax credit (see the credits listed under Who Should File, ear-lier).

Note. If the injured spouse's residence was in a community property state at any time dur-ing the tax year, special rules may apply. See the Instructions for Form 8379.

If you haven’t filed your joint return and you know that your joint refund will be offset, file Form 8379 with your return. You should receive your refund within 14 weeks from the date the paper return is filed or within 11 weeks from the date the return is filed electronically.

If you filed your joint return and your joint re-fund was offset, file Form 8379 by itself. When filed after offset, it can take up to 8 weeks to re-ceive your refund. Don't attach the previously filed tax return, but do include copies of all Forms W-2 and W-2G for both spouses and any Forms 1099 that show income tax withheld. The processing of Form 8379 may be delayed if

these forms aren’t attached, or if the form is in-complete when filed.

A separate Form 8379 must be filed for each tax year to be considered.

An injured spouse claim is different

from an innocent spouse relief request. CAUTION An injured spouse uses Form 8379 to request the division of the tax overpayment at-tributed to each spouse. An innocent spouse uses Form 8857, Request for Innocent Spouse Relief, to request relief from joint liability for tax, interest, and penalties on a joint return for items of the other spouse (or former spouse) that were incorrectly reported on the joint return. For information on innocent spouses, see Relief from joint responsibility under Filing a Joint Re-turn in chapter 2.

Amount You Owe

When you complete your return, you will deter-mine if you have paid the full amount of tax that you owe. If you owe additional tax, you should pay it with your return.

You don't have to pay if the amount TIP you owe is under $1.

If the IRS figures your tax for you, you will re-ceive a bill for any tax that is due. You should pay this bill within 30 days (or by the due date of your return, if later). See Tax Figured by IRS in chapter 13.

If you don't pay your tax when due, you

may have to pay a failure-to-pay pen-CAUTION alty. See Penalties, later. For more in-formation about your balance due, see Pub. 594.

If the amount you owe for 2020 is large, TIP you may want to increase the amount of income tax withheld from your pay or make estimated tax payments for 2021. See

chapter 4 for more information.

How To Pay

You can pay online, by phone, by mobile de-vice, in cash, or by check or money order. Don't include any estimated tax payment for 2021 in this payment. Instead, make the estimated tax payment separately.

Bad check or payment. The penalty for writ-ing a bad check to the IRS is $25 or 2% of the check, whichever is more. This penalty also ap-plies to other forms of payment if the IRS doesn't receive the funds.

Pay online. Paying online is convenient and secure and helps make sure we get your pay-ments on time.

You can pay online with a direct transfer from your bank account using IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS), or by debit or credit card.

To pay your taxes online or for more infor-mation, go to IRS.gov/Payments.

Pay by phone. Paying by phone is another safe and secure method of paying electroni-cally. Use one of the following methods.

EFTPS.

Debit or credit card.

To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 800-555-4477 (English) or 800-244-4829 (Es-pañol). People who are deaf, hard of hearing, or have a speech disability and have access to TTY/TDD equipment can call 800-733-4829. For more information about EFTPS, go to IRS.gov/Payments or EFTPS.gov.

To pay using a debit or credit card, you can call one of the following service providers. There is a convenience fee charged by these providers that varies by provider, card type, and payment amount.

WorldPay US, Inc.

844-PAY-TAX-8TM (844-729-8298)

www.payUSAtax.com

Official Payments

888-UPAY-TAXTM (888-872-9829)

www.officialpayments.com

Link2Gov Corporation

888-PAY-1040TM (888-729-1040)

www.PAY1040.com

For the latest details on how to pay by phone, go to IRS.gov/Payments.

Pay by mobile device. To pay through your mobile device, download the IRS2Go app.

Pay by cash. Cash is an in-person payment option for individuals provided through retail partners with a maximum of $1,000 per day per transaction. To make a cash payment, you must

first be registered online at www.officialpayments.com.

Pay by check or money order. Make your check or money order payable to “United States Treasury” for the full amount due. Don't send cash. Don't attach the payment to your return. Show your correct name, address, SSN, day-time phone number, and the tax year and form number on the front of your check or money or-der. If you are filing a joint return, enter the SSN shown first on your tax return.

Notice to taxpayers presenting checks. When you provide a check as payment, you au-thorize us either to use information from your check to make a one-time electronic fund trans-fer from your account or to process the payment as a check transaction. When we use informa-tion from your check to make an electronic fund transfer, funds may be withdrawn from your ac-count as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.

No checks of $100 million or more accep-ted. The IRS can’t accept a single check (in-cluding a cashier’s check) for amounts of $100,000,000 ($100 million) or more. If you are sending $100 million or more by check, you’ll need to spread the payment over 2 or more checks with each check made out for an amount less than $100 million. This limit doesn’t apply to other methods of payment (such as electronic payments). Please consider a method of payment other than check if the amount of the payment is over $100 million.

Estimated tax payments. Don't include any 2021 estimated tax payment in the payment for your 2020 income tax return. See chapter 4 for information on how to pay estimated tax.

Interest

Interest is charged on tax you don't pay by the due date of your return. Interest is charged even if you get an extension of time for filing.

If the IRS figures your tax for you, to TIP avoid interest for late payment, you must pay the bill within 30 days of the date of the bill or by the due date of your return,

whichever is later. For information, see Tax Fig-ured by IRS in chapter 13.

Interest on penalties. Interest is charged on the failure-to-file penalty, the accuracy-related penalty, and the fraud penalty from the due date of the return (including extensions) to the date of payment. Interest on other penalties starts on the date of notice and demand, but isn't charged on penalties paid within 21 calendar days from the date of the notice (or within 10 business days if the notice is for $100,000 or more).

Interest due to IRS error or delay. All or part of any interest you were charged can be for-given if the interest is due to an unreasonable error or delay by an officer or employee of the IRS in performing a ministerial or managerial act.

A ministerial act is a procedural or mechani-cal act that occurs during the processing of your case. A managerial act includes personnel transfers and extended personnel training. A decision concerning the proper application of federal tax law isn't a ministerial or managerial act.

The interest can be forgiven only if you aren’t responsible in any important way for the error or delay and the IRS has notified you in writing of the deficiency or payment. For more information, see Pub. 556.

Interest and certain penalties may also be suspended for a limited period if you filed your return by the due date (including extensions) and the IRS doesn't provide you with a notice specifically stating your liability and the basis for it before the close of the 36-month period be-ginning on the later of:

The date the return is filed, or

The due date of the return without regard to extensions.

For more information, see Pub. 556.

Installment Agreement

If you can’t pay the full amount due with your re-turn, you can ask to make monthly installment payments for the full or a partial amount. How-ever, you will be charged interest and may be charged a late payment penalty on the tax not paid by the date your return is due, even if your request to pay in installments is granted. If your request is granted, you must also pay a fee. To limit the interest and penalty charges, pay as much of the tax as possible with your return. But before requesting an installment agreement, you should consider other less costly

Chapter 1Filing InformationPage 15

alternatives, such as a bank loan or credit card payment.

To apply for an installment agreement on-line, go to IRS.gov/OPA. You can also use Form 9465.

In addition to paying by check or money or-der, you can use a credit or debit card or direct payment from your bank account to make in-stallment agreement payments. See How To Pay, earlier.

Gift To Reduce Debt Held by the Public

You can make a contribution (gift) to reduce debt held by the public. If you wish to do so, make a separate check

payable to “Bureau of the Fiscal Service.” Send your check to:

Bureau of the Fiscal Service

ATTN: Department G

P.O. Box 2188

Parkersburg, WV 26106-2188

Or enclose your separate check in the envelope with your income tax return. Don't add this gift to any tax you owe.

For information on making this type of gift on-line, go to TreasuryDirect.gov and click on “How to Make a Contribution to Reduce the Debt.”

You may be able to deduct this gift as a charitable contribution on next year's tax return if you itemize your deductions on Schedule A (Form 1040).

Name and Address

After you have completed your return, fill in your name and address in the appropriate area of Form 1040 or 1040-SR.

You must include your SSN in the cor-

rect place on your tax return.

CAUTION

P.O. box. If your post office doesn't deliver mail to your street address and you have a P.O. box, enter your P.O. box number on the line for your present home address instead of your street address.

Foreign address. If your address is outside the United States or its possessions or territo-ries, enter the city name on the appropriate line of your Form 1040 or 1040-SR. Don't enter any other information on that line, but also complete the spaces below that line.

1. Foreign country name.

2. Foreign province/state/county.

3. Foreign postal code.

Don’t abbreviate the country name. Follow the country's practice for entering the postal code and the name of the province, county, or state.

Where Do I File?

After you complete your return, you must send it to the IRS. You can mail it or you may be able to

Page 16Chapter 1Filing Information

file it electronically. See Why Should I File Elec-tronically, earlier.

Mailing your paper return. Mail your paper return to the address shown in the Instructions for Forms 1040 and 1040-SR.

What Happens After I File?

After you send your return to the IRS, you may have some questions. This section discusses concerns you may have about recordkeeping, your refund, and what to do if you move.

What Records Should I Keep?

This part discusses why you should keep re-cords, what kinds of records you should keep, and how long you should keep them.

You must keep records so that you can

prepare a complete and accurate in-RECORDS come tax return. The law doesn't re-quire any special form of records. However, you should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.

If you file a claim for refund, you must be able to prove by your records that you have overpaid your tax.

This part doesn't discuss the records you should keep when operating a business. For in-formation on business records, see Pub. 583, Starting a Business and Keeping Records.

Why Keep Records?

Good records help you:

Identify sources of income. Your re-cords can identify the sources of your in-come to help you separate business from nonbusiness income and taxable from nontaxable income.

Keep track of expenses. You can use your records to identify expenses for which you can claim a deduction. This helps you determine if you can itemize deductions on your tax return.

Keep track of the basis of property. You need to keep records that show the basis of your property. This includes the original cost or other basis of the property and any improvements you made.

Prepare tax returns. You need records to prepare your tax return.

Support items reported on tax returns. The IRS may question an item on your re-turn. Your records will help you explain any item and arrive at the correct tax. If you can’t produce the correct documents, you may have to pay additional tax and be sub-ject to penalties.

Kinds of Records To Keep

The IRS doesn't require you to keep your re-cords in a particular way. Keep them in a

manner that allows you and the IRS to deter-mine your correct tax.

You can use your checkbook to keep a re-cord of your income and expenses. You also need to keep documents, such as receipts and sales slips, that can help prove a deduction.

In this section, you will find guidance about basic records that everyone should keep. The section also provides guidance about specific records you should keep for certain items.

Electronic records. All requirements that ap-ply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. When you replace hard copy books and records, you must maintain the electronic storage systems for as long as they are material to the administration of tax law.

For details on electronic storage system re-quirements, see Revenue Procedure 97-22, which is on page 9 of Internal Revenue Bulletin 1997-13 at IRS.gov/pub/irs-irbs/irb97-13.pdf.

Copies of tax returns. You should keep cop-ies of your tax returns as part of your tax re-cords. They can help you prepare future tax re-turns, and you will need them if you file an amended return or are audited. Copies of your returns and other records can be helpful to your survivor or the executor or administrator of your estate.

If necessary, you can request a copy of a re-turn and all attachments (including Form W-2) from the IRS by using Form 4506. There is a charge for a copy of a return. For information on the cost and where to file, see the instructions for Form 4506.

If you just need information from your return, you can order a transcript in one of the following ways.

Go to IRS.gov/Transcript.

Call 800-908-9946.

Use Form 4506-T or Form 4506T-EZ.

There is no fee for a transcript. For more infor-mation, see Form 4506-T.

Basic Records

Basic records are documents that everybody should keep. These are the records that prove your income and expenses. If you own a home or investments, your basic records should con-tain documents related to those items.

Income. Your basic records prove the amounts you report as income on your tax re-turn. Your income may include wages, divi-dends, interest, and partnership or S corpora-tion distributions. Your records can also prove that certain amounts aren’t taxable, such as tax-exempt interest.

Note. If you receive a Form W-2, keep Copy C until you begin receiving social security benefits. This will help protect your benefits in case there is a question about your work record or earnings in a particular year.

Expenses. Your basic records prove the ex-penses for which you claim a deduction (or credit) on your tax return. Your deductions may include alimony, charitable contributions, mort-gage interest, and real estate taxes. You may

also have childcare expenses for which you can claim a credit.

Home. Your basic records should enable you to determine the basis or adjusted basis of your home. You need this information to determine if you have a gain or loss when you sell your home or to figure depreciation if you use part of your home for business purposes or for rent. Your records should show the purchase price, settlement or closing costs, and the cost of any improvements. They may also show any casu-alty losses deducted and insurance reimburse-ments for casualty losses.

For detailed information on basis, including which settlement or closing costs are included in the basis of your home, see Pub. 551, Basis of Assets.

When you sell your home, your records should show the sales price and any selling ex-penses, such as commissions. For information on selling your home, see Pub. 523, Selling Your Home.

Investments. Your basic records should ena-ble you to determine your basis in an invest-ment and whether you have a gain or loss when you sell it. Investments include stocks, bonds, and mutual funds. Your records should show the purchase price, sales price, and commis-sions. They may also show any reinvested divi-dends, stock splits and dividends, load charges, and original issue discount (OID).

For information on stocks, bonds, and mu-tual funds, see Pub. 550, Investment Income and Expenses, and Pub. 551.

Proof of Payment

One of your basic records is proof of payment. You should keep these records to support cer-tain amounts shown on your tax return. Proof of payment alone isn't proof that the item claimed on your return is allowable. You should also keep other documents that will help prove that the item is allowable.

Generally, you prove payment with a cash receipt, financial account statement, credit card statement, canceled check, or substitute check. If you make payments in cash, you should get a dated and signed receipt showing the amount and the reason for the payment.

If you make payments using your bank ac-count, you may be able to prove payment with an account statement.

Account statements. You may be able to prove payment with a legible financial account statement prepared by your bank or other finan-cial institution.

Pay statements. You may have deductible ex-penses withheld from your paycheck, such as medical insurance premiums. You should keep your year-end or final pay statements as proof of payment of these expenses.

How Long To Keep Records

You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Gener-ally, this means you must keep records that

support items shown on your return until the pe-riod of limitations for that return runs out.

The period of limitations is the period of time in which you can amend your return to claim a credit or refund or the IRS can assess addi-tional tax. Table 1 -7 contains the periods of limi-tations that apply to income tax returns. Unless otherwise stated, the years refer to the period beginning after the return was filed. Returns filed before the due date are treated as being filed on the due date.

Table 1-7. Period of Limitations

	IF you...	THEN the
		period is...
1	File a return and (2),	3 years.
	(3), and (4) don't apply
	to you
2	Don't report income	6 years.
	that you should and it is
	more than 25% of the
	gross income shown on
	your return
3	File a fraudulent return	No limit.
4	Don't file a return	No limit.
5	File a claim for credit or	The later of 3
	refund after you filed	years or 2
	your return	years after tax
		was paid.
6	File a claim for a loss	7 years.
	from worthless
	securities or bad debt
	deduction

Property. Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxa-ble disposition. You must keep these records to figure your basis for computing gain or loss when you sell or otherwise dispose of the prop-erty.

Generally, if you received property in a non-taxable exchange, your basis in that property is the same as the basis of the property you gave up. You must keep the records on the old prop-erty, as well as the new property, until the pe-riod of limitations expires for the year in which you dispose of the new property in a taxable disposition.

Refund Information

You can go online to check the status of your 2020 refund 24 hours after the IRS receives your e-filed return, or 4 weeks after you mail a paper return. If you filed Form 8379 with your return, allow 14 weeks (11 weeks if you filed electronically) before checking your refund sta-tus. Be sure to have a copy of your 2020 tax re-turn handy because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the re-fund. To check on your refund, do one of the following.

Go to IRS.gov/Refunds.

Download the free IRS2Go app to your smart phone and use it to check your re-fund status.

Call the automated refund hotline at 800-829-1954.

Interest on Refunds

If you are due a refund, you may get interest on it. The interest rates are adjusted quarterly.

If the refund is made within 45 days after the due date of your return, no interest will be paid. If you file your return after the due date (includ-ing extensions), no interest will be paid if the re-fund is made within 45 days after the date you filed. If the refund isn't made within this 45-day period, interest will be paid from the due date of the return or from the date you filed, whichever is later.

Accepting a refund check doesn't change your right to claim an additional refund and in-terest. File your claim within the period of time that applies. See Amended Returns and Claims for Refund, later. If you don't accept a refund check, no more interest will be paid on the over-payment included in the check.

Interest on erroneous refund. All or part of any interest you were charged on an erroneous refund will generally be forgiven. Any interest charged for the period before demand for re-payment was made will be forgiven unless:

1. You, or a person related to you, caused the erroneous refund in any way; or

2. The refund is more than $50,000.

For example, if you claimed a refund of $100 on your return, but the IRS made an error and sent you $1,000, you wouldn't be charged inter-est for the time you held the $900 difference. You must, however, repay the $900 when the IRS asks.

Change of Address

If you have moved, file your return using your new address.

If you move after you filed your return, you should give the IRS clear and concise notifica-tion of your change of address. The notification may be written, electronic, or oral. Send written notification to the Internal Revenue Service Center serving your old address. You can use Form 8822, Change of Address. If you are ex-pecting a refund, also notify the post office serv-ing your old address. This will help in forwarding your check to your new address (unless you chose direct deposit of your refund). For more information, see Revenue Procedure 2010-16, 2010-19 I.R.B. 664, available at IRS.gov/irb/ 2010-19_IRB/ar07.html.

Be sure to include your SSN (and the name and SSN of your spouse if you filed a joint re-turn) in any correspondence with the IRS.

What if I Made a Mistake?

Errors may delay your refund or result in notices being sent to you. If you discover an error, you can file an amended return or claim for refund.

Chapter 1Filing InformationPage 17

Amended Returns and Claims for Refund

You should correct your return if, after you have filed it, you find that:

1. You didn't report some income,

2. You claimed deductions or credits you shouldn't have claimed,

3. You didn't claim deductions or credits you could have claimed, or

4. You should have claimed a different filing status. (Once you file a joint return, you can’t choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.)

If you need a copy of your return, see Copies of tax returns under Kinds of Records To Keep, earlier, in this chapter.

Form 1040-X. Use Form 1040-X to correct a return you have already filed.

Completing Form 1040-X. On Form 1040-X, enter your income, deductions, and credits as you originally reported them on your return; the changes you are making; and the corrected amounts. Then, figure the tax on the corrected amount of taxable income and the amount you owe or your refund.

If you owe tax, the IRS offers several pay-ment options. See How To Pay , earlier. The tax owed won't be subtracted from any amount you had credited to your estimated tax.

If you can’t pay the full amount due with your return, you can ask to make monthly installment payments. See Installment Agreement, earlier.

If you overpaid tax, you can have all or part of the overpayment refunded to you, or you can apply all or part of it to your estimated tax. If you choose to get a refund, it will be sent separately from any refund shown on your original return.

Filing Form 1040-X. When completing Form 1040-X, don't forget to show the year of your original return and explain all changes you made. Be sure to attach any forms or schedules needed to explain your changes. Mail your Form 1040-X to the Internal Revenue Service Center serving the area where you now live (as shown in the Instructions for Form 1040-X). However, if you are filing Form 1040 -X in re-sponse to a notice you received from the IRS, mail it to the address shown on the notice.

File a separate form for each tax year in-volved.

Time for filing a claim for refund. Generally, you must file your claim for a credit or refund within 3 years after the date you filed your origi-nal return or within 2 years after the date you paid the tax, whichever is later. Returns filed before the due date (without regard to exten-sions) are considered filed on the due date (even if the due date was a Saturday, Sunday, or legal holiday). These time periods are sus-pended while you are financially disabled, dis-cussed later.

If the last day for claiming a credit or refund is a Saturday, Sunday, or legal holiday, you can file the claim on the next business day.

If you don't file a claim within this period, you may not be entitled to a credit or a refund.

Page 18Chapter 1Filing Information

*Federally declared disaster.* If you were		tax of $500 paid before that period can’t be re-
affected by a federally declared disaster, you		funded or credited.
may have additional time to file your amended		If you file a claim more than 3 years after you
return. See Pub. 556 for details.
Protective claim for refund. Generally, a pro-		file your return, the credit or refund can’t be
		more than the tax you paid within the 2 years
tective claim is a formal claim or amended re-
		immediately before you file the claim.
turn for credit or refund normally based on cur-
rent litigation or expected changes in tax law or		*Example.* You filed your 2016 tax return on
other legislation. You file a protective claim
		April 15, 2017. You paid taxes of $500. On No-
when your right to a refund is contingent on fu-
		vember 5, 2018, after an examination of your
ture events and may not be determinable until
		2016 return, you had to pay an additional tax of
after the statute of limitations expires. A valid
		$200. On May 12, 2020, you file a claim for a re-
protective claim doesn't have to list a particular
		fund of $300. However, because you filed your
dollar amount or demand an immediate refund.
		claim more than 3 years after you filed your re-
However, a valid protective claim must:
		turn, your refund will be limited to the $200 you
• Be in writing and signed;		paid during the 2 years immediately before you
•	Include your name, address, SSN or ITIN,	filed your claim.
	and other contact information;	Financially disabled. The time periods for
•	Identify and describe the contingencies af-	claiming a refund are suspended for the period
	fecting the claim;	in which you are financially disabled. For a joint
•	Clearly alert the IRS to the essential nature	income tax return, only one spouse has to be fi-
		nancially disabled for the time period to be sus-
•	of the claim; and	pended. You are financially disabled if you are
	Identify the specific year(s) for which a re-	unable to manage your financial affairs because
	fund is sought.	of a medically determinable physical or mental
Mail your protective claim for refund to the ad-		impairment which can be expected to result in
		death or which has lasted or can be expected to
dress listed in the Instructions for Form 1040-X
		last for a continuous period of not less than 12
under Where To File.
		months. However, you aren’t treated as finan-
	Generally, the IRS will delay action on the
		cially disabled during any period your spouse or
protective claim until the contingency is re-		any other person is authorized to act on your
solved.		behalf in financial matters.
Limit on amount of refund. If you file your		To claim that you are financially disabled,
claim within 3 years after the date you filed your		you must send in the following written state-
return, the credit or refund can’t be more than		ments with your claim for refund.
the part of the tax paid within the 3-year period		1. A statement from your qualified physician
(plus any extension of time for filing your return)
		that includes:
immediately before you filed the claim. This
		a. The name and a description of your
time period is suspended while you are finan-
cially disabled, discussed later.		physical or mental impairment;
		b. The physician's medical opinion that
*Tax paid.* Payments, including estimated
		the impairment prevented you from
tax payments, made before the due date (with-
		managing your financial affairs;
out regard to extensions) of the original return
are considered paid on the due date. For exam-		c. The physician's medical opinion that
ple, income tax withheld during the year is con-		the impairment was or can be expec-
sidered paid on the due date of the return, April		ted to result in death, or that its dura-
15 for most taxpayers.		tion has lasted, or can be expected to
	*Example 1.* You made estimated tax pay-	last, at least 12 months;
		d. The specific time period (to the best of
ments of $500 and got an automatic extension
of time to October 15, 2017, to file your 2016 in-		the physician's knowledge); and
come tax return. When you filed your return on		e. The following certification signed by
that date, you paid an additional $200 tax. On		the physician: “I hereby certify that, to
October 15, 2020, you filed an amended return		the best of my knowledge and belief,
and claimed a refund of $700. Because you		the above representations are true,
filed your claim within 3 years after you filed		correct, and complete.”
your original return, you can get a refund of up		2. A statement made by the person signing
to $700, the tax paid within the 3 years plus the
6-month extension period immediately before		the claim for credit or refund that no per-
you filed the claim.		son, including your spouse, was author-
		ized to act on your behalf in financial mat-
	*Example 2.* The situation is the same as in	ters during the period of disability (or the
Example 1, except you filed your return on Oc-		exact dates that a person was authorized
tober 30, 2017, 2 weeks after the extension pe-		to act for you).
riod ended. You paid an additional $200 on that		Exceptions for special types of refunds. If
date. On October 31, 2020, you filed an amen-		you file a claim for one of the items in the follow-
ded return and claimed a refund of $700. Al-		ing list, the dates and limits discussed earlier
though you filed your claim within 3 years from		may not apply. These items, and where to get
the date you filed your original return, the refund		more information, are as follows.
was limited to $200, the tax paid within the 3		• Bad debt. See Pub. 550.
years plus the 6-month extension period imme-

diately before you filed the claim. The estimated

Worthless security. See Pub. 550.

Foreign tax paid or accrued. See Pub. 514.

Net operating loss carryback. See Pub. 536.

Carryback of certain business tax credits. See Form 3800.

Claim based on an agreement with the IRS extending the period for assessment of tax.

Processing claims for refund. Claims are usually processed 8–12 weeks after they are filed. Your claim may be accepted as filed, dis-allowed, or subject to examination. If a claim is examined, the procedures are the same as in the examination of a tax return.

If your claim is disallowed, you will receive an explanation of why it was disallowed.

Taking your claim to court. You can sue for a refund in court, but you must first file a timely claim with the IRS. If the IRS disallows your claim or doesn't act on your claim within 6 months after you file it, you can then take your claim to court. For information on the burden of proof in a court proceeding, see Pub. 556.

The IRS provides a direct method to move your claim to court if:

You are filing a claim for a credit or refund based solely on contested income tax or on estate tax or gift tax issues considered in your previously examined returns, and

You want to take your case to court instead of appealing it within the IRS.

When you file your claim with the IRS, you get the direct method by requesting in writing that your claim be immediately rejected. A no-tice of claim disallowance will be sent to you.

You have 2 years from the date of mailing of the notice of claim disallowance to file a refund suit in the U.S. District Court having jurisdiction or in the U.S. Court of Federal Claims.

Interest on refund. If you receive a refund be-cause of your amended return, interest will be paid on it from the due date of your original re-turn or the date you filed your original return, whichever is later, to the date you filed the amended return. However, if the refund isn't made within 45 days after you file the amended return, interest will be paid up to the date the re-fund is paid.

Reduced refund. Your refund may be reduced by an additional tax liability that has been as-sessed against you.

Also, your refund may be reduced by amounts you owe for past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain other federal nontax debts, such as student loans. If your spouse owes these debts, see Offset against debts under Refunds, earlier, for the correct refund procedures to follow.

Effect on state tax liability. If your return is changed for any reason, it may affect your state income tax liability. This includes changes made as a result of an examination of your re-turn by the IRS. Contact your state tax agency for more information.

Penalties

The law provides penalties for failure to file re-turns or pay taxes as required.

Civil Penalties

If you don't file your return and pay your tax by the due date, you may have to pay a penalty. You may also have to pay a penalty if you sub-stantially understate your tax, understate a re-portable transaction, file an erroneous claim for refund or credit, file a frivolous tax submission, or fail to supply your SSN or ITIN. If you provide fraudulent information on your return, you may have to pay a civil fraud penalty.

Filing late. If you don't file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. The penalty is based on the tax not paid by the due date (without regard to extensions).

Fraud. If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.

Return over 60 days late. If you file your return more than 60 days after the due date, or extended due date, the minimum penalty is the smaller of $435 or 100% of the unpaid tax.

Exception. You won't have to pay the pen-alty if you show that you failed to file on time be-cause of reasonable cause and not because of willful neglect.

Paying tax late. You will have to pay a fail-ure-to-pay penalty of 1/2 of 1% (0.50%) of your unpaid taxes for each month, or part of a month, after the due date that the tax isn't paid. This penalty doesn't apply during the automatic 6-month extension of time to file period if you paid at least 90% of your actual tax liability on or before the due date of your return and pay the balance when you file the return.

The monthly rate of the failure-to-pay pen-alty is half the usual rate (0.25% instead of 0.50%) if an installment agreement is in effect for that month. You must have filed your return by the due date (including extensions) to qualify for this reduced penalty.

If a notice of intent to levy is issued, the rate will increase to 1% at the start of the first month beginning at least 10 days after the day that the notice is issued. If a notice and demand for im-mediate payment is issued, the rate will in-crease to 1% at the start of the first month be-ginning after the day that the notice and demand is issued.

This penalty can’t be more than 25% of your unpaid tax. You won't have to pay the penalty if you can show that you had a good reason for not paying your tax on time.

Combined penalties. If both the failure-to-file penalty and the failure-to-pay penalty (dis-cussed earlier) apply in any month, the 5% (or 15%) failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $435 or 100% of the unpaid tax.

Accuracy-related penalty. You may have to pay an accuracy-related penalty if you under-pay your tax because:

1. You show negligence or disregard of the rules or regulations,

2. You substantially understate your income tax,

3. You claim tax benefits for a transaction that lacks economic substance, or

4. You fail to disclose a foreign financial as-set.

The penalty is equal to 20% of the underpay-ment. The penalty is 40% of any portion of the underpayment that is attributable to an undis-closed noneconomic substance transaction or an undisclosed foreign financial asset transac-tion. The penalty won't be figured on any part of an underpayment on which the fraud penalty (discussed later) is charged.

Negligence or disregard. The term “negli-gence” includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a re-turn. Negligence also includes failure to keep adequate books and records. You won't have to pay a negligence penalty if you have a reasona-ble basis for a position you took.

The term “disregard” includes any careless, reckless, or intentional disregard.

Adequate disclosure. You can avoid the penalty for disregard of rules or regulations if you adequately disclose on your return a posi-tion that has at least a reasonable basis. See Disclosure statement, later.

This exception won't apply to an item that is attributable to a tax shelter. In addition, it won't apply if you fail to keep adequate books and re-cords, or substantiate items properly.

Substantial understatement of income tax. You understate your tax if the tax shown on your return is less than the correct tax. The understatement is substantial if it is more than the larger of 10% of the correct tax or $5,000. However, the amount of the understatement may be reduced to the extent the understate-ment is due to:

1. Substantial authority, or

2. Adequate disclosure and a reasonable ba-sis.

If an item on your return is attributable to a tax shelter, there is no reduction for an adequate disclosure. However, there is a reduction for a position with substantial authority, but only if you reasonably believed that your tax treatment was more likely than not the proper treatment.

Substantial authority. Whether there is or was substantial authority for the tax treatment of an item depends on the facts and circumstan-ces. Some of the items that may be considered are court opinions, Treasury regulations, reve-nue rulings, revenue procedures, and notices and announcements issued by the IRS and published in the Internal Revenue Bulletin that involve the same or similar circumstances as yours.

Disclosure statement. To adequately dis-close the relevant facts about your tax

Chapter 1Filing InformationPage 19

treatment of an item, use Form 8275. You must also have a reasonable basis for treating the item the way you did.

In cases of substantial understatement only, items that meet the requirements of Revenue Procedure 2019-42 (or later update) are consid-ered adequately disclosed on your return with-out filing Form 8275.

Use Form 8275-R to disclose items or posi-tions contrary to regulations.

Transaction lacking economic sub-stance. For more information on economic substance, see section 7701(o).

Foreign financial asset. For more informa-tion on undisclosed foreign financial assets, see section 6662(j).

Reasonable cause. You won't have to pay a penalty if you show a good reason (reasona-ble cause) for the way you treated an item. You must also show that you acted in good faith. This doesn't apply to a transaction that lacks economic substance.

Filing erroneous claim for refund or credit. You may have to pay a penalty if you file an er-roneous claim for refund or credit. The penalty is equal to 20% of the disallowed amount of the claim, unless you can show a reasonable basis for the way you treated an item. However, any disallowed amount due to a transaction that lacks economic substance won't be treated as having a reasonable basis. The penalty won't be figured on any part of the disallowed amount of the claim that relates to the earned income credit or on which the accuracy-related or fraud penalties are charged.

Frivolous tax submission. You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. A frivo-lous tax return is one that doesn't include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect. For more information on frivolous returns, frivo-lous submissions, and a list of positions that are identified as frivolous, see Notice 2010-33, 2010-17 I.R.B. 609, available at IRS.gov/irb/ 2010-17_IRB/ar13.html.

You will have to pay the penalty if you filed this kind of return or submission based on a friv-olous position or a desire to delay or interfere with the administration of federal tax laws. This includes altering or striking out the preprinted language above the space provided for your signature.

This penalty is added to any other penalty provided by law.

Fraud. If there is any underpayment of tax on your return due to fraud, a penalty of 75% of the underpayment due to fraud will be added to your tax.

Joint return. The fraud penalty on a joint re-turn doesn't apply to a spouse unless some part of the underpayment is due to the fraud of that spouse.

Failure to supply SSN. If you don't include your SSN or the SSN of another person where required on a return, statement, or other docu-ment, you will be subject to a penalty of $50 for each failure. You will also be subject to a pen-alty of $50 if you don't give your SSN to another

Page 20Chapter 2Filing Status

person when it is required on a return, state-ment, or other document.

For example, if you have a bank account that earns interest, you must give your SSN to the bank. The number must be shown on the Form 1099-INT or other statement the bank sends you. If you don't give the bank your SSN, you will be subject to the $50 penalty. (You may also be subject to “backup” withholding of in-come tax. See chapter 4.)

You won't have to pay the penalty if you are able to show that the failure was due to reason-able cause and not willful neglect.

Criminal Penalties

You may be subject to criminal prosecution (brought to trial) for actions such as:

1. Tax evasion;

2. Willful failure to file a return, supply infor-mation, or pay any tax due;

3. Fraud and false statements;

4. Preparing and filing a fraudulent return; or

5. Identity theft.

Identity Theft

Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund.

To reduce your risk:

Protect your SSN,

Ensure your employer is protecting your SSN, and

Be careful when choosing a tax preparer.

If your tax records are affected by identity theft and you receive a notice from the IRS, re-spond right away to the name and phone num-ber printed on the IRS notice or letter.

If your SSN has been lost or stolen or you suspect you are a victim of tax-related identity theft, visit IRS.gov/IdentityTheft to learn what steps you should take.

For more information, see Pub. 5027. Victims of identity theft who are experienc-

ing economic harm or a systemic problem, or are seeking help in resolving tax problems that have not been resolved through normal chan-nels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the National Taxpayer Advocate help-line at 877-777-4778 or 800-829-4059 (TTY/ TDD). Deaf or hard-of-hearing individuals can also contact the IRS through relay services such as the Federal Relay Service, available at GSA.gov/fedrelay.

Protect yourself from suspicious emails or phishing schemes. Phishing is the crea-tion and use of email and websites designed to mimic legitimate business emails and websites. The most common form is the act of sending an email to a user falsely claiming to be an estab-lished legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.

The IRS doesn't initiate contacts with tax-payers via emails. Also, the IRS doesn't request detailed personal information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

If you receive an unsolicited email claiming to be from the IRS, forward the message to phishing@irs.gov. You may also report misuse of the IRS name, logo, forms, or other IRS prop-erty to the Treasury Inspector General for Tax Administration toll free at 800-366-4484. You can forward suspicious emails to the Federal Trade Commission (FTC) at spam@uce.gov or report them at ftc.gov/complaint. You can con-tact them at ftc.gov/idtheft or 877-IDTHEFT (877-438-4338). If you have been a victim of identity theft, see IdentityTheft.gov or Pub. 5027. People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 866-653-4261.

Go to IRS.gov/IDProtection to learn more about identity theft and how to reduce your risk.

2.

Filing Status

What’s New

Tuition and fees. The tuition and fees deduc-tion is extended for qualified tuition and fees paid in calendar years 2018, 2019, and 2020. Don’t claim the deduction for expenses paid af-ter 2020 unless the credit is extended again.

Introduction

This chapter helps you determine which filing status to use. There are five filing statuses.

Single.

Married Filing Jointly.

Married Filing Separately.

Head of Household.

Qualifying Widow(er).

If more than one filing status applies to TIP you, choose the one that will give you

the lowest tax.

You must determine your filing status before you can determine whether you must file a tax return (chapter 1), your standard deduction (chapter 10), and your tax (chapter 11). You also use your filing status to determine whether you are eligible to claim certain deductions and credits.

Useful Items

You may want to see:

Publication

501 Dependents, Standard Deduction, and Filing Information

503 Child and Dependent Care Expenses

519 U.S. Tax Guide for Aliens

555 Community Property

559 Survivors, Executors, and Administrators

925 Passive Activity and At-Risk Rules

For these and other useful items, go to IRS.gov/ Forms.

Marital Status

In general, your filing status depends on whether you are considered unmarried or mar-ried.

Unmarried persons. You are considered un-married for the whole year if, on the last day of your tax year, you are either:

Unmarried, or

Legally separated from your spouse under a divorce or separate maintenance decree.

State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

Divorced persons. If you are divorced un-der a final decree by the last day of the year, you are considered unmarried for the whole year.

Divorce and remarriage. If you obtain a di-vorce for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intend to and do, in fact, remarry each other in the next tax year, you and your spouse must file as married individuals in both years.

Annulled marriages. If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered un-married even if you filed joint returns for earlier years. File Form 1040-X, Amended U.S. Indi-vidual Income Tax Return, claiming single or head of household status for all tax years that are affected by the annulment and not closed by the statute of limitations for filing a tax return. Generally, for a credit or refund, you must file Form 1040-X within 3 years (including exten-sions) after the date you filed your original re-turn or within 2 years after the date you paid the tax, whichever is later. If you filed your original return early (for example, March 1), your return is considered filed on the due date (generally April 15). However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1.

Head of household or qualifying widow(er). If you are considered unmarried, you may be able to file as head of household or as qualifying widow(er). See Head of House-hold and Qualifying Widow(er) to see if you qualify.

Married persons. If you are considered mar-ried, you and your spouse can file a joint return or separate returns.

Considered married. You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests.

1. You are married and living together.

2. You are living together in a common law marriage recognized in the state where you now live or in the state where the com-mon law marriage began.

3. You are married and living apart, but not legally separated under a decree of di-vorce or separate maintenance.

4. You are separated under an interlocutory (not final) decree of divorce.

Spouse died during the year. If your spouse died during the year, you are consid-ered married for the whole year for filing status purposes.

If you didn't remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. For the next 2 years, you may be entitled to the special bene-fits described later under Qualifying Widow(er).

If you remarried before the end of the tax year, you can file a joint return with your new spouse. Your deceased spouse's filing status is married filing separately for that year.

Married persons living apart. If you live apart from your spouse and meet certain tests, you may be able to file as head of household even if you aren't divorced or legally separated. If you qualify to file as head of household in-stead of married filing separately, your standard deduction will be higher. Also, your tax may be lower, and you may be able to claim the earned income credit. See Head of Household, later.

Single

Your filing status is single if you are considered unmarried and you don’t qualify for another fil-ing status. To determine your marital status, see Marital Status, earlier.

Widow(er). Your filing status may be single if you were widowed before January 1, 2020, and didn't remarry before the end of 2020. You may, however, be able to use another filing status that will give you a lower tax. See Head of Household and Qualifying Widow(er), later, to see if you qualify.

How to file. On Form 1040 or 1040-SR, show your filing status as single by checking the “Sin-gle” box on the Filing Status line at the top of the form. Use the Single column of the Tax Ta-ble, or Section A of the Tax Computation Work-sheet, to figure your tax.

Married Filing Jointly

You can choose married filing jointly as your fil-ing status if you are considered married and both you and your spouse agree to file a joint return. On a joint return, you and your spouse report your combined income and deduct your combined allowable expenses. You can file a

joint return even if one of you had no income or deductions.

If you and your spouse decide to file a joint return, your tax may be lower than your com-bined tax for the other filing statuses. Also, your standard deduction (if you don’t itemize deduc-tions) may be higher, and you may qualify for tax benefits that don’t apply to other filing sta-tuses.

How to file. On Form 1040 or 1040 -SR, show your filing status as married filing jointly by checking the “Married filing jointly” box on the Filing Status line at the top of the form. Use the Married filing jointly column of the Tax Table, or Section B of the Tax Computation Worksheet, to figure your tax.

If you and your spouse each have in-TIP come, you may want to figure your tax both on a joint return and on separate returns (using the filing status of married filing

separately). You can choose the method that gives the two of you the lower combined tax un-less you are required to file separately.

Spouse died. If your spouse died during the year, you are considered married for the whole year and can choose married filing jointly as your filing status. See Spouse died during the year, under Married persons, earlier, for more information.

If your spouse died in 2021 before filing a 2020 return, you can choose married filing jointly as your filing status on your 2020 return.

Divorced persons. If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year and you can’t choose married filing jointly as your fil-ing status.

Filing a Joint Return

Both you and your spouse must include all of your income and deductions on your joint re-turn.

Accounting period. Both of you must use the same accounting period, but you can use differ-ent accounting methods. See Accounting Peri-ods and Accounting Methods in chapter 1.

Joint responsibility. Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint re-turn. This means that if one spouse doesn't pay the tax due, the other may have to. Or, if one spouse doesn't report the correct tax, both spouses may be responsible for any additional taxes assessed by the IRS. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

You may want to file separately if:

You believe your spouse isn't reporting all of his or her income, or

You don’t want to be responsible for any taxes due if your spouse doesn't have enough tax withheld or doesn't pay enough estimated tax.

Divorced taxpayer. You may be held jointly and individually responsible for any tax, inter-est, and penalties due on a joint return filed be-fore your divorce. This responsibility may apply

Chapter 2Filing StatusPage 21

even if your divorce decree states that your for-mer spouse will be responsible for any amounts due on previously filed joint returns.

Relief from joint responsibility. In some cases, one spouse may be relieved of joint re-sponsibility for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. You can ask for relief no matter how small the liability.

There are three types of relief available.

1. Innocent spouse relief.

2. Separation of liability (available only to joint filers who are divorced, widowed, le-gally separated, or haven't lived together for the 12 months ending on the date the election for this relief is filed).

3. Equitable relief.

You must file Form 8857, Request for Inno-cent Spouse Relief, to request relief from joint responsibility. Pub. 971, Innocent Spouse Re-lief, explains these kinds of relief and who may qualify for them.

Signing a joint return. For a return to be con-sidered a joint return, both spouses must gener-ally sign the return.

Spouse died before signing. If your spouse died before signing the return, the exec-utor or administrator must sign the return for your spouse. If neither you nor anyone else has yet been appointed as executor or administra-tor, you can sign the return for your spouse and enter “Filing as surviving spouse” in the area where you sign the return.

Spouse away from home. If your spouse is away from home, you should prepare the re-turn, sign it, and send it to your spouse to sign so that it can be filed on time.

Power of attorney. In order for you to sign a return for your spouse in any of these cases, you must attach to the return a power of attor-ney (POA) that authorizes you to sign for your spouse. You can use a POA that states that you have been granted authority to sign the return, or you can use Form 2848. Part I of Form 2848 must state that you are granted authority to sign the return.

Nonresident alien or dual-status alien. Gen-erally, a married couple can’t file a joint return if either one is a nonresident alien at any time during the tax year. However, if one spouse was a nonresident alien or dual-status alien who was married to a U.S. citizen or resident alien at the end of the year, the spouses can choose to file a joint return. If you do file a joint return, you and your spouse are both treated as U.S. residents for the entire tax year. See chap-ter 1 of Pub. 519, U.S. Tax Guide for Aliens.

Married Filing Separately

You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be respon-sible only for your own tax or if it results in less tax than filing a joint return.

If you and your spouse don’t agree to file a joint return, you must use this filing status un-less you qualify for head of household status, discussed later.

You may be able to choose head of house-hold filing status if you are considered unmar-ried because you live apart from your spouse and meet certain tests (explained under Head of Household, later). This can apply to you even if you aren't divorced or legally separated. If you qualify to file as head of household, instead of

“NRA” in the space for your spouse's SSN. Use the Married filing separately column of the Tax Table, or Section C of the Tax Computation Worksheet, to figure your tax.

Special Rules

If you choose married filing separately as your filing status, the following special rules apply. Because of these special rules, you usually pay more tax on a separate return than if you use another filing status you qualify for.

1.	Your tax rate is generally higher than on a
	joint return.
2.	Your exemption amount for figuring the al-
	ternative minimum tax is half that allowed
	on a joint return.
3.	You can’t take the credit for child and de-
	pendent care expenses in most cases,
	and the amount you can exclude from in-
	come under an employer's dependent
	care assistance program is limited to
	$2,500 (instead of $5,000 on a joint re-
	turn). However, if you are legally separa-
	ted or living apart from your spouse, you
	may be able to file a separate return and
	still take the credit. For more information
	about these expenses, the credit, and the
	exclusion, see What’s Your Filing Status?
	in Pub. 503, Child and Dependent Care
	Expenses.
4.	You can’t take the earned income credit.
5.	You can’t take the exclusion or credit for
	adoption expenses in most cases.
6.	You can’t take the education credits (the
	American opportunity credit and lifetime
	learning credit), the deduction for student
	loan interest, or the deduction for tuition
	and fees.

*Injury or disease prevents signing.* If your	as married filing separately, your tax may be
spouse can’t sign because of disease or injury	lower, you may be able to claim the earned in-
and tells you to sign for him or her, you can sign	come credit and certain other benefits, and your
your spouse's name in the proper space on the	standard deduction will be higher. The head of
return followed by the words “By (your name),	household filing status allows you to choose the
Husband (or Wife).” Be sure to sign in the	standard deduction even if your spouse choo-
space provided for your signature. Attach a	ses to itemize deductions. See		Head of House-

dated statement, signed by you, to the return.	hold	, later, for more information.

7.	You can’t exclude any interest income
	from qualified U.S. savings bonds you
	used for higher education expenses.
8.	If you lived with your spouse at any time
	during the tax year:
	a. You can’t claim the credit for the eld-
	erly or the disabled, and

The statement should include the form number of the return you are filing, the tax year, and the reason your spouse can’t sign; it should also state that your spouse has agreed to your sign-ing for him or her.

Signing as guardian of spouse. If you are the guardian of your spouse who is mentally in-competent, you can sign the return for your spouse as guardian.

Spouse in combat zone. You can sign a joint return for your spouse if your spouse can’t sign because he or she is serving in a combat zone (such as the Persian Gulf Area, Serbia, Montenegro, Albania, or Afghanistan), even if you don’t have a power of attorney or other statement. Attach a signed statement to your return explaining that your spouse is serving in a combat zone. For more information on special tax rules for persons who are serving in a com-bat zone, or who are in missing status as a re-sult of serving in a combat zone, see Pub. 3, Armed Forces' Tax Guide.

You will generally pay more combined TIP tax on separate returns than you would on a joint return for the reasons listed under Special Rules, later. However, unless

you are required to file separately, you should figure your tax both ways (on a joint return and on separate returns). This way, you can make sure you are using the filing status that results in the lowest combined tax. When figuring the combined tax of a married couple, you may want to consider state taxes as well as federal taxes.

How to file. If you file a separate return, you generally report only your own income, credits, and deductions.

Select this filing status by checking the “Married filing separately” box on the Filing Sta-tus line at the top of Form 1040 or 1040-SR. En-ter your spouse's full name and SSN or ITIN in the entry space at the bottom of the Filing Sta-tus section. If your spouse doesn't have and isn't required to have an SSN or ITIN, enter

	b. You must include in income a greater
	percentage (up to 85%) of any social
	security or equivalent railroad retire-
	ment benefits you received.
9.	The following credits and deductions are
	reduced at income levels half of those for
	a joint return:
	a. The child tax credit and the credit for
	other dependents, and
	b. The retirement savings contributions
	credit.
10.	Your capital loss deduction limit is $1,500
	(instead of $3,000 on a joint return).
11.	If your spouse itemizes deductions, you
	can’t claim the standard deduction. If you
	can claim the standard deduction, your
	basic standard deduction is half of the
	amount allowed on a joint return.

Adjusted gross income (AGI) limits. If your AGI on a separate return is lower than it would

Page 22Chapter 2Filing Status

have been on a joint return, you may be able to deduct a larger amount for certain deductions that are limited by AGI, such as medical expen-ses.

Individual retirement arrangements (IRAs). You may not be able to deduct all or part of your contributions to a traditional IRA if you or your spouse were covered by an employee retire-ment plan at work during the year. Your deduc-tion is reduced or eliminated if your income is more than a certain amount. This amount is much lower for married individuals who file sep-arately and lived together at any time during the year. For more information, see How Much Can You Deduct in chapter 9.

Rental activity losses. If you actively partici-pated in a passive rental real estate activity that produced a loss, you can generally deduct the loss from your nonpassive income, up to $25,000. This is called a “special allowance.” However, married persons filing separate re-turns who lived together at any time during the year can’t claim this special allowance. Married persons filing separate returns who lived apart at all times during the year are each allowed a $12,500 maximum special allowance for losses from passive real estate activities. See Rental Activities in Pub. 925, Passive Activity and At-Risk Rules, for more information.

Community property states. If you live in a community property state and file separately, your income may be considered separate in-come or community income for income tax pur-poses. Community property states include Ari-zona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wiscon-sin. See Pub. 555, Community Property, for more information.

Joint Return After

Separate Returns

You can change your filing status from a sepa-rate return to a joint return by filing an amended return using Form 1040-X.

You can generally change to a joint return any time within 3 years from the due date of the separate return or returns. This doesn't include any extensions. A separate return includes a re-turn filed by you or your spouse claiming mar-ried filing separately, single, or head of house-hold filing status.

Separate Returns After Joint Return

Once you file a joint return, you can’t choose to file separate returns for that year after the due date of the return.

Exception. A personal representative for a de-cedent can change from a joint return elected by the surviving spouse to a separate return for the decedent. The personal representative has 1 year from the due date (including extensions) of the return to make the change. See Pub. 559, Survivors, Executors, and Administrators, for more information on filing a return for a dece-dent.

Head of Household

You may be able to file as head of household if you meet all of the following requirements.

1. You are unmarried or considered unmar-ried on the last day of the year. See Mari-tal Status, earlier, and Considered Unmar-ried, later.

2. You paid more than half of the cost of keeping up a home for the year.

3. A qualifying person lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the qualifying person is your dependent parent, he or she doesn't have to live with you. See Special rule for pa-rent, later, under Qualifying Person.

If you qualify to file as head of house-TIP hold, your tax rate will usually be lower than the rates for single or married fil-ing separately. You will also receive a higher

standard deduction than if you file as single or married filing separately.

How to file. Indicate your choice of this filing status by checking the “Head of Household” box on the Filing Status line at the top of Form 1040 or 1040 -SR. If the child who qualifies you for this filing status isn't claimed as your de-pendent in the Dependents section of Form 1040 or 1040-SR, enter the child's name in the entry space at the bottom of the Filing Status section. Use the Head of a household column of the Tax Table, or Section D of the Tax Com-putation Worksheet, to figure your tax.

Considered Unmarried

To qualify for head of household status, you must be either unmarried or considered unmar-ried on the last day of the year. You are consid-ered unmarried on the last day of the tax year if you meet all of the following tests.

1. You file a separate return. A separate re-turn includes a return claiming married fil-ing separately, single, or head of house-hold filing status.

2. You paid more than half of the cost of keeping up your home for the tax year.

3. Your spouse didn't live in your home dur-ing the last 6 months of the tax year. Your spouse is considered to live in your home even if he or she is temporarily absent due to special circumstances. See Temporary absences under Qualifying Person, later.

4. Your home was the main home of your child, stepchild, or foster child for more than half the year. (See Home of qualifying person under Qualifying Person, later, for rules applying to a child's birth, death, or temporary absence during the year.)

5. You must be able to claim the child as a dependent. However, you meet this test if you can’t claim the child as a dependent only because the noncustodial parent can claim the child using the rules described in Children of divorced or separated parents (or parents who live apart) under

Qualifying Child in chapter 3, or referred to in Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) under Qualifying Relative in chap-ter 3. The general rules for claiming a child as a dependent are explained in chap-ter 3.

If you were considered married for part

of the year and lived in a community CAUTION property state (listed earlier under Mar-ried Filing Separately), special rules may apply in determining your income and expenses. See Pub. 555 for more information.

Nonresident alien spouse. You are consid-ered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you don’t choose to treat your nonresident spouse as a resident alien. However, your spouse isn't a qualifying person for head of household purposes. You must have another qualifying person and meet the other tests to be eligible to file as head of household.

Choice to treat spouse as resident. You are considered married if you choose to treat your spouse as a resident alien. See chapter 1 of Pub. 519.

Keeping Up a Home

To qualify for head of household status, you must pay more than half of the cost of keeping up a home for the year. You can determine whether you paid more than half of the cost of keeping up a home by using Worksheet 2-1.

Costs you include. Include in the cost of keeping up a home expenses, such as rent, mortgage interest, real estate taxes, insurance on the home, repairs, utilities, and food eaten in the home.

Costs you don’t include. Don’t include the costs of clothing, education, medical treatment, vacations, life insurance, or transportation. Also don’t include the rental value of a home you own or the value of your services or those of a member of your household.

Qualifying Person

See Table 2 -1 to see who is a qualifying person. Any person not described in Table 2-1 isn't a qualifying person.

Example 1—Child. Your unmarried son lived with you all year and was 18 years old at the end of the year. He didn't provide more than half of his own support and doesn't meet the tests to be a qualifying child of anyone else. As a result, he is your qualifying child (see Qualify-ing Child in chapter 3) and, because he is sin-gle, your qualifying person for head of house-hold purposes.

Example 2—Child who isn't qualifying person. The facts are the same as in Exam-ple 1, except your son was 25 years old at the end of the year and his gross income was $5,000. Because he doesn't meet the age test (explained under Qualifying Child in chapter 3), your son isn't your qualifying child. Because he

Chapter 2Filing StatusPage 23

Worksheet 2-1. Cost of Keeping
Up a Home		Keep for Your Records
		Amount		Total Cost
		You Paid
Property taxes	$		$
Mortgage interest expense
Rent
Utility charges
Repairs/Maintenance
Property insurance
Food eaten in the home
Other household expenses
Totals	$		$
Minus total amount you paid			(	)
Amount others paid			$
If the total amount you paid is more than the amount others paid, you meet the
requirement of paying more than half of the cost of keeping up the home.

entry space at the bottom of the Filing Status section. Use the Married filing jointly column of the Tax Table, or Section B of the Tax Compu-tation Worksheet, to figure your tax.

Eligibility rules. You are eligible to file your 2020 return as a qualifying widow(er) if you meet all of the following tests.

You were entitled to file a joint return with your spouse for the year your spouse died. It doesn't matter whether you actually filed a joint return.

Your spouse died in 2018 or 2019 and you didn't remarry before the end of 2020.

You have a child or stepchild (not a foster child) whom you can claim as a dependent or could claim as a dependent except that, for 2020:

a. The child had gross income of $4,300 or more,

b. The child filed a joint return, or

c. You could be claimed as a depend-ent on someone else’s return.

If the child isn't claimed as your de-

doesn't meet the gross income test (explained under Qualifying Relative in chapter 3), he isn't your qualifying relative. As a result, he isn't your qualifying person for head of household purpo-ses.

Example 3—Girlfriend. Your girlfriend lived with you all year. Even though she may be your qualifying relative if the gross income and support tests (explained in chapter 3) are met, she isn't your qualifying person for head of household purposes because she isn't related to you in one of the ways listed under Relatives who don’t have to live with you in chapter 3. See Table 2-1.

Example 4—Girlfriend's child. The facts are the same as in Example 3, except your girl-friend's 10-year-old son also lived with you all year. He isn't your qualifying child and, because he is your girlfriend's qualifying child, he isn't your qualifying relative (see Not a Qualifying Child Test in chapter 3). As a result, he isn't your qualifying person for head of household purposes.

Home of qualifying person. Generally, the qualifying person must live with you for more than half the year.

Special rule for parent. If your qualifying person is your father or mother, you may be eli-gible to file as head of household even if your father or mother doesn't live with you. However, you must be able to claim your father or mother as a dependent. Also, you must pay more than half of the cost of keeping up a home that was the main home for the entire year for your father or mother.

If you pay more than half of the cost of keep-ing your parent in a rest home or home for the elderly, that counts as paying more than half of the cost of keeping up your parent's main home.

Death or birth. You may be eligible to file as head of household even if the individual who qualifies you for this filing status is born or dies during the year. If the individual is your

qualifying child, the child must have lived with you for more than half the part of the year he or she was alive. If the individual is anyone else, see Pub. 501.

Temporary absences. You and your quali-fying person are considered to live together even if one or both of you are temporarily ab-sent from your home due to special circumstan-ces, such as illness, education, business, vaca-tion, military service, or detention in a juvenile facility. It must be reasonable to assume the ab-sent person will return to the home after the temporary absence. You must continue to keep up the home during the absence.

Kidnapped child. You may be eligible to file as head of household even if the child who is your qualifying person has been kidnapped. For more information, see Pub 501.

Qualifying Widow(er)

If your spouse died in 2020, you can use mar-ried filing jointly as your filing status for 2020 if you otherwise qualify to use that status. The year of death is the last year for which you can file jointly with your deceased spouse. See Mar-ried Filing Jointly, earlier.

You may be eligible to use qualifying widow(er) as your filing status for 2 years fol-lowing the year your spouse died. For example, if your spouse died in 2019, and you haven't re-married, you may be able to use this filing sta-tus for 2020 and 2021.

This filing status entitles you to use joint re-turn tax rates and the highest standard deduc-tion amount (if you don’t itemize deductions). It doesn't entitle you to file a joint return.

How to file. Indicate your choice of this filing status by checking the “Qualifying widow(er)” box on the Filing Status line at the top of Form 1040 or 1040 -SR. If the child who qualifies you for this filing status isn’t claimed as your de-pendent in the Dependents section of Form 1040 or 1040-SR, enter the child’s name in the

pendent in the Dependents section on Form 1040 or 1040-SR, enter the child's name in the entry space at the bottom of the Filing Status section. If you don’t enter the name, it will take us longer to process your return.

This child lived in your home all year, ex-cept for temporary absences. See Tempo-rary absences, earlier, under Head of Household. There are also exceptions, de-scribed later, for a child who was born or died during the year and for a kidnapped child.

You paid more than half of the cost of keeping up a home for the year. See Keep-ing Up a Home, earlier, under Head of Household.

Example. John's wife died in 2018. John hasn't remarried. During 2019 and 2020, he continued to keep up a home for himself and his child, who lives with him and whom he can claim as a dependent. For 2018, he was entitled to file a joint return for himself and his deceased wife. For 2019 and 2020, he can file as qualify-ing widower. After 2020, he can file as head of household if he qualifies.

Death or birth. You may be eligible to file as a qualifying widow(er) if the child who qualifies you for this filing status is born or dies during the year. You must have provided more than half of the cost of keeping up a home that was the child's main home during the entire part of the year he or she was alive.

Kidnapped child. You may be eligible to file as a qualifying widow(er) even if the child who qualifies you for this filing status has been kid-napped. See Pub. 501.

As mentioned earlier, this filing status

is available for only 2 years following CAUTION the year your spouse died.

Page 24Chapter 2Filing Status

Table 2-1. Who Is a Qualifying Person Qualifying You To File as Head of Household?1

Caution. See the text of this chapter for the other requirements you must meet to claim head of household filing status.

IF the person is your . . .

AND...

THEN that person is . . .

qualifying child (such as a son,

he or she is single

a qualifying person, whether or

daughter, or grandchild who lived with

not the child meets the Citizen or

you more than half the year and meets

Resident Test in chapter

3.

certain other tests)2

he or she is married and you can claim him

a qualifying person.

or her as a dependent

he or she is married and you can’t claim him

not a qualifying person.3

or her as a dependent

qualifying relative4 who is your father or

you can claim him or her as a dependent5

a qualifying person.6

mother

you can’t claim him or her as a dependent

not a qualifying person.

qualifying relative4 other than your father

he or she lived with you more than half the

a qualifying person.

or mother (such as a grandparent,

year, and he or she is related to you in one

brother, or sister who meets certain

of the ways listed under Relatives who don’t

tests)

have to live with you in

chapter 3 and you

can claim him or her

as a dependent5

he or she didn't live with you more than half

not a qualifying person.

the year

he or she isn't related to you in one of the

not a qualifying person.

ways listed under Relatives who don’t have

to live with you in

chapter 3 and is your

qualifying relative only because he or she

lived with you all year as a member of your

household

you can’t claim him or her as a dependent

not a qualifying person.

1 A person can’t qualify more than one taxpayer to use the head of household filing status for the year.

2 The term qualifying child is defined in chapter 3. Note. If you are a noncustodial parent, the term “qualifying child” for head of household filing status doesn't include a child who is your qualifying child only because of the rules described under Children of divorced or separated parents (or parents who live apart) under Qualifying Child in chapter 3. If you are the custodial parent and those rules apply, the child is generally your qualifying child for head of household filing status even though the child isn't a qualifying child you can claim as a dependent.

3 This person is a qualifying person if the only reason you can’t claim them as a dependent is that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's return.

4 The term qualifying relative is defined in chapter 3.

5 If you can claim a person as a dependent only because of a multiple support agreement, that person isn't a qualifying person. See Multiple Support Agreement in chapter 3.

6 See Special rule for parent under Qualifying Person, earlier.

3.

Dependents

Introduction

This chapter discusses the following topics.

Dependents—You can generally claim your qualifying child or qualifying relative as a dependent.

Social security number (SSN) requirement for dependents—You must list the SSN of any person you claim as a dependent.

Useful Items

You may want to see:

Publication

501 Dependents, Standard Deduction,

and Filing Information

503 Child and Dependent Care Expenses

526 Charitable Contributions

Form (and Instructions)

2120 Multiple Support Declaration

8332 Release/Revocation of Release of

Claim to Exemption for Child by Custodial Parent

Dependents

The terms qualifying child and qualifying rel-ative are defined later.

All the requirements for claiming a depend-ent are summarized in Table 3-1.

Housekeepers, maids, or servants. If these people work for you, you can’t claim them as dependents.

Child tax credit. You may be entitled to a child tax credit for each qualifying child who was un-der age 17 at the end of the year if you claimed that child as a dependent. For more informa-tion, see chapter 14.

Credit for other dependents. You may be en-titled to a credit for other dependents for each qualifying child who isn’t a qualifying child for the child tax credit and for each qualifying rela-tive. For more information, see chapter 14.

How to claim dependents. On page 1 of your Form 1040 or 1040-SR, enter the names of your dependents in the Dependents section.

The term “dependent” means:

A qualifying child, or

A qualifying relative.

Chapter 3DependentsPage 25

Table 3-1. Overview of the Rules for Claiming a Dependent

Caution. This table is only an overview of the rules. For details, see the rest of this chapter.

You can’t claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer.

You can’t claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.

You can’t claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.1

You can’t claim a person as a dependent unless that person is your qualifying child or qualifying relative.

	Tests To Be a Qualifying Child			Tests To Be a Qualifying Relative
1.	The child must be your son, daughter, stepchild, foster child,	1.		The person can’t be your qualifying child or the
	brother, sister, half brother, half sister, stepbrother, stepsister,			qualifying child of any other taxpayer.
	or a descendant of any of them.
2.	The child must be (a) under age 19 at the end of the year and	2.		The person either (a) must be related to you in one of
				the ways listed under Relatives who don’t have to live
	younger than you (or your spouse, if filing jointly); (b) under age
				with you, or (b) must live with you all year as a member
	24 at the end of the year, a student, and younger than you (or			of your	household2 (and your relationship must not
	your spouse, if filing jointly); or (c) any age if permanently and		violate local law).
	totally disabled.
3.	The child must have lived with you for more than half of the	3.	The person's gross income for the year must be less
			than $4,300.3
	year.2
4.	The child must not have provided more than half of his or her	4.		You must provide more than half of the person's total
				support for the year.4
	own support for the year.

5. The child must not be filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid).

If the child meets the rules to be a qualifying child of more than one

person, only one person can actually treat the child as a qualifying

child. See Qualifying Child of More Than One Person, later, to find

out which person is the person entitled to claim the child as a

qualifying child.

There is an exception for certain adopted children.

There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children.

There is an exception if the person is disabled and has income from a sheltered workshop.

There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children.

Exceptions

Even if you have a qualifying child or qualifying relative, you can claim that person as a depend-ent only if these three tests are met.

1. Dependent taxpayer test.

2. Joint return test.

3. Citizen or resident test.

These three tests are explained in detail here.

Page 26Chapter 3Dependents

Dependent Taxpayer Test

If you can be claimed as a dependent by an-other person, you can’t claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you can’t claim that per-son as a dependent.

If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse can’t claim any dependents on your joint return.

Joint Return Test

You generally can’t claim a married person as a dependent if he or she files a joint return.

Exception. You can claim a person as a de-pendent who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estima-ted tax paid.

Example 1—Child files joint return. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $25,000 for the year. The couple files a joint return. You can’t claim your daughter as a dependent.

Example 2—Child files joint return only as claim for refund of withheld tax. Your 18-year-old son and his 17-year-old wife had

$800 of wages from part -time jobs and no other income. They lived with you all year. Neither is required to file a tax return. They don’t have a child. Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so you aren't disqualified from claiming each of them as a dependent just be-cause they file a joint return. You can claim each of them as a dependent if all the other tests to do so are met.

Example 3—Child files joint return to claim American opportunity credit. The facts are the same as in Example 2, except no taxes were taken out of your son's pay or his wife's pay. However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Because claiming the American opportunity credit is their reason for filing the return, they aren't filing it only to get a refund of income tax withheld or estimated tax paid. The exception to the joint return test doesn't apply, so you can’t claim ei-ther of them as a dependent.

Citizen or Resident Test

You generally can’t claim a person as a de-pendent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an ex-ception for certain adopted children, as ex-plained next.

Exception for adopted child. If you are a U.S. citizen or U.S. national who has legally adopted a child who isn't a U.S. citizen, U.S. resident alien, or U.S. national, this test is met if the child lived with you as a member of your household all year. This exception also applies if the child was lawfully placed with you for legal adoption.

Child's place of residence. Children usually are citizens or residents of the country of their parents.

If you were a U.S. citizen when your child was born, the child may be a U.S. citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country.

Foreign students' place of residence. For-eign students brought to this country under a qualified international education exchange pro-gram and placed in American homes for a tem-porary period generally aren't U.S. residents and don’t meet this test. You can’t claim them as dependents. However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. See Expenses Paid for Student Living With You in Pub. 526, Charitable Contributions.

U.S. national. A U.S. national is an individual who, although not a U.S. citizen, owes his or her allegiance to the United States. U.S. nation-als include American Samoans and Northern Mariana Islanders who chose to become U.S. nationals instead of U.S. citizens.

Qualifying Child

Five tests must be met for a child to be your qualifying child. The five tests are:

1. Relationship,

2. Age,

3. Residency,

4. Support, and

5. Joint return.

These tests are explained next.

If a child meets the five tests to be the

qualifying child of more than one per-CAUTION son, there are rules you must use to determine which person can actually treat the child as a qualifying child. See Qualifying Child of More Than One Person, later.

Relationship Test

To meet this test, a child must be:

Your son, daughter, stepchild, foster child, or a descendant (for example, your grand-child) of any of them; or

Your brother, sister, half brother, half sis-ter, stepbrother, stepsister, or a descend-ant (for example, your niece or nephew) of any of them.

Adopted child. An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.

Foster child. A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Age Test

To meet this test, a child must be:

Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly);

A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly); or

Permanently and totally disabled at any time during the year, regardless of age.

Example. Your son turned 19 on Decem-ber 10. Unless he was permanently and totally disabled or a student, he doesn't meet the age test because, at the end of the year, he wasn't under age 19.

Child must be younger than you or spouse. To be your qualifying child, a child who isn't per-manently and totally disabled must be younger than you. However, if you are married filing jointly, the child must be younger than you or your spouse but doesn't have to be younger than both of you.

Example 1—Child not younger than you or spouse. Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse, who provide more than half of his sup-port. He isn't disabled. Both you and your

spouse are 21 years old, and you file a joint re-turn. Your brother isn't your qualifying child be-cause he isn't younger than you or your spouse.

Example 2—Child younger than your spouse but not younger than you. The facts are the same as in Example 1, except your spouse is 25 years old. Because your brother is younger than your spouse, and you and your spouse are filing a joint return, your brother is your qualifying child, even though he isn't younger than you.

Student defined. To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year:

1. A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school; or

2. A student taking a full-time, on-farm train-ing course given by a school described in

(1), or by a state, county, or local govern-ment agency.

The 5 calendar months don’t have to be con-secutive.

Full-time student. A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance.

School defined. A school can be an ele-mentary school; junior or senior high school; college; university; or technical, trade, or me-chanical school. However, an on-the-job train-ing course, correspondence school, or school offering courses only through the Internet doesn’t count as a school.

Vocational high school students. Stu-dents who work on “co-op” jobs in private indus-try as a part of a school's regular course of classroom and practical training are considered full-time students.

Permanently and totally disabled. Your child is permanently and totally disabled if both of the following apply.

He or she can’t engage in any substantial gainful activity because of a physical or mental condition.

A doctor determines the condition has las-ted or can be expected to last continuously for at least a year or can lead to death.

Residency Test

To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, kidnap-ped children, and children of divorced or sepa-rated parents.

Temporary absences. Your child is consid-ered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as:

Illness,

Education,

Business,

Vacation,

Chapter 3DependentsPage 27

Military service, or

Detention in a juvenile facility.

Death or birth of child. A child who was born or died during the year is treated as having lived with you more than half of the year if your home was the child's home more than half of the time he or she was alive during the year. The same is true if the child lived with you more than half the year except for any required hospital stay following birth.

Child born alive. You may be able to claim as a dependent a child born alive during the year, even if the child lived only for a moment. State or local law must treat the child as having been born alive. There must be proof of a live birth shown by an official document, such as a birth certificate. The child must be your qualify-ing child or qualifying relative, and all the other tests to claim the child as a dependent must be met.

Stillborn child. You can’t claim a stillborn child as a dependent.

Kidnapped child. You may be able to treat your child as meeting the residency test even if the child has been kidnapped. See Pub. 501 for details.

Children of divorced or separated parents (or parents who live apart). In most cases, because of the residency test, a child of di-vorced or separated parents is the qualifying child of the custodial parent. However, the child will be treated as the qualifying child of the non-custodial parent if all four of the following state-ments are true.

1. The parents:

a. Are divorced or legally separated un-der a decree of divorce or separate maintenance;

b. Are separated under a written separa-tion agreement; or

c. Lived apart at all times during the last 6 months of the year, whether or not they are or were married.

2. The child received over half of his or her support for the year from the parents.

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

4. Either of the following statements is true.

d. The custodial parent signs a written declaration, discussed later, that he or she won't claim the child as a depend-ent for the year, and the noncustodial parent attaches this written declara-tion to his or her return. (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or sepa-ration agreement, later. If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement, later.)

e. A pre-1985 decree of divorce or sepa-rate maintenance or written separa-tion agreement that applies to 2020 states that the noncustodial parent can claim the child as a dependent, the decree or agreement wasn't

Page 28Chapter 3Dependents

changed after 1984 to say the non-custodial parent can’t claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during the year.

If statements (1) through (4) are all true, only the noncustodial parent can:

Claim the child as a dependent, and

Claim the child as a qualifying child for the child tax credit or credit for other depend-ents.

However, this doesn’t allow the noncustodial parent to claim head of household filing status, the credit for child and dependent care expen-ses, the exclusion for dependent care benefits, the earned income credit, or the health cover-age tax credit. See Applying the tiebreaker rules to divorced or separated parents (or parents who live apart), later.

Example—Earned income credit. Even if statements (1) through (4) are all true and the custodial parent signs Form 8332 or a substan-tially similar statement that he or she won’t claim the child as a dependent for 2020, this doesn’t allow the noncustodial parent to claim the child as a qualifying child for the earned in-come credit. The custodial parent or another taxpayer, if eligible, can claim the child for the earned income credit.

Custodial parent and noncustodial pa-rent. The custodial parent is the parent with whom the child lived for the greater number of nights during the year. The other parent is the noncustodial parent.

If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year.

A child is treated as living with a parent for a night if the child sleeps:

At that parent's home, whether or not the parent is present; or

In the company of the parent, when the child doesn't sleep at a parent's home (for example, the parent and child are on vaca-tion together).

Equal number of nights. If the child lived with each parent for an equal number of nights during the year, the custodial parent is the pa-rent with the higher adjusted gross income (AGI).

December 31. The night of December 31 is treated as part of the year in which it begins. For example, the night of December 31, 2020, is treated as part of 2020.

Emancipated child. If a child is emancipa-ted under state law, the child is treated as not living with either parent. See Examples 5 and 6.

Absences. If a child wasn't with either pa-rent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. But if it can’t be determined with which parent the child nor-mally would have lived or if the child wouldn’t have lived with either parent that night, the child

is treated as not living with either parent that night.

Parent works at night. If, due to a parent's nighttime work schedule, a child lives for a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. On a school day, the child is treated as living at the primary resi-dence registered with the school.

Example 1—Child lived with one parent for a greater number of nights. You and your child’s other parent are divorced. In 2020, your child lived with you 210 nights and with the other parent 156 nights. You are the custodial parent.

Example 2—Child is away at camp. In 2020, your daughter lives with each parent for alternate weeks. In the summer, she spends 6 weeks at summer camp. During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she hadn’t attended summer camp.

Example 3—Child lived same number of nights with each parent. Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. Your AGI is $40,000. Your ex-spouse's AGI is $25,000. You are treated as your son's custodial parent because you have the higher AGI.

Example 4—Child is at parent’s home but with other parent. Your son normally lives with you during the week and with his other pa-rent, your ex-spouse, every other weekend. You become ill and are hospitalized. The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. Your son is treated as living with you during this 10-day period because he was living in your home.

Example 5—Child emancipated in May. When your son turned age 18 in May 2020, he became emancipated under the law of the state where he lives. As a result, he isn't considered in the custody of his parents for more than half of the year. The special rule for children of di-vorced or separated parents doesn't apply.

Example 6—Child emancipated in Au-gust. Your daughter lives with you from Janu-ary 1, 2020, until May 31, 2020, and lives with her other parent, your ex -spouse, from June 1, 2020, through the end of the year. She turns 18 and is emancipated under state law on August 1, 2020. Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2020. You are the custodial parent.

Written declaration. The custodial parent must use either Form 8332 or a similar state-ment (containing the same information required by the form) to make the written declaration to release a claim to an exemption for a child to the noncustodial parent. Although the exemp-tion amount is zero for tax year 2020, this re-lease allows the noncustodial parent to claim

the child tax credit, additional child tax credit, and credit for other dependents, if applicable, for the child. The noncustodial parent must at-tach a copy of the form or statement to his or her tax return.

The release can be for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration.

Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce de-cree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.

1. The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.

2. The custodial parent won't claim the child as a dependent for the year.

3. The years for which the noncustodial pa-rent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.

The cover page (write the other parent's social security number on this page).

The pages that include all of the informa-tion identified in items (1) through (3) above.

The signature page with the other parent's signature and the date of the agreement.

Post-2008 divorce decree or separation agreement. The noncustodial parent can’t at-tach pages from the decree or agreement in-stead of Form 8332 if the decree or agreement went into effect after 2008. The custodial parent must sign either Form 8332 or a similar state-ment whose only purpose is to release the cus-todial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. The form or statement must release the custodial parent's claim to the child without any conditions. For example, the re-lease must not depend on the noncustodial pa-rent paying support.

The noncustodial parent must attach

the required information even if it was CAUTION filed with a return in an earlier year.

Revocation of release of claim to an ex-emption. The custodial parent can revoke a release of claim to an exemption. For the revo-cation to be effective for 2020, the custodial pa-rent must have given (or made reasonable ef-forts to give) written notice of the revocation to the noncustodial parent in 2019 or earlier. The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation.

Remarried parent. If you remarry, the sup-port provided by your new spouse is treated as provided by you.

Parents who never married. This special rule for divorced or separated parents also ap-plies to parents who never married and who lived apart at all times during the last 6 months of the year.

Support Test (To Be a Qualifying Child)

To meet this test, the child can’t have provided more than half of his or her own support for the year.

This test is different from the support test to be a qualifying relative, which is described later. However, to see what is or isn't support, see Support Test (To Be a Qualifying Relative), later. If you aren't sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful.

Example. You provided $4,000 toward your 16-year-old son's support for the year. He has a part-time job and provided $6,000 to his own support. He provided more than half of his own support for the year. He isn't your qualify-ing child.

Foster care payments and expenses. Pay-ments you receive for the support of a foster child from a child placement agency are consid-ered support provided by the agency. Similarly, payments you receive for the support of a foster child from a state or county are considered sup-port provided by the state or county.

If you aren't in the trade or business of pro-viding foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contri-butions, the expenses are deductible as chari-table contributions but aren't considered sup-port you provided. For more information about the deduction for charitable contributions, see Pub. 526. If your unreimbursed expenses aren't deductible as charitable contributions, they may qualify as support you provided.

If you are in the trade or business of provid-ing foster care, your unreimbursed expenses aren't considered support provided by you.

Example 1. Lauren, a foster child, lived with Mr. and Mrs. Smith for the last 3 months of the year. The Smiths cared for Lauren because they wanted to adopt her (although she hadn’t been placed with them for adoption). They didn't care for her as a trade or business or to benefit the agency that placed her in their home. The Smiths' unreimbursed expenses aren't deductible as charitable contributions but are considered support they provided for Lau-ren.

Example 2. You provided $3,000 toward your 10-year-old foster child's support for the year. The state government provided $4,000, which is considered support provided by the state, not by the child. See Support provided by the state (welfare, food stamps, housing, etc.), later. Your foster child didn't provide more than half of her own support for the year.

Scholarships. A scholarship received by a child who is a student isn't taken into account in determining whether the child provided more than half of his or her own support.

Joint Return Test (To Be a Qualifying Child)

To meet this test, the child can’t file a joint re-turn for the year.

Exception. An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.

Example 1—Child files joint return. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $25,000 for the year. The couple files a joint return. Because your daughter and her husband file a joint re-turn, she isn't your qualifying child.

Example 2—Child files joint return only as a claim for refund of withheld tax. Your 18-year-old son and his 17-year-old wife had $800 of wages from part -time jobs and no other income. They lived with you all year. Neither is required to file a tax return. They don’t have a child. Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met.

Example 3—Child files joint return to claim American opportunity credit. The facts are the same as in Example 2, except no taxes were taken out of your son's pay or his wife's pay. However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Because claiming the American opportunity credit is their reason for filing the return, they aren't filing it only to get a refund of income tax withheld or estimated tax paid. The exception to the joint return test doesn't apply, so your son isn't your qualifying child.

Qualifying Child of More Than One Person

If your qualifying child isn't a qualifying TIP child of anyone else, this topic doesn't apply to you and you don’t need to read about it. This is also true if your qualifying

child isn't a qualifying child of anyone else ex-cept your spouse with whom you plan to file a joint return.

If a child is treated as the qualifying

child of the noncustodial parent under CAUTION the rules for children of divorced or separated parents (or parents who live apart) described earlier, see Applying the tiebreaker rules to divorced or separated parents (or pa-rents who live apart), later.

Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Al-though the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).

1. The child tax credit or credit for other de-pendents.

Chapter 3DependentsPage 29

Worksheet 3-1. Worksheet for Determining Support		Keep for Your Records
1.	Funds Belonging to the Person You Supported
	Enter the total funds belonging to the person you supported, including income received (taxable
	and nontaxable) and amounts borrowed during the year, plus the amount in savings and other
	accounts at the beginning of the year. Don’t include funds provided by the state; include those	1.
	amounts on line 23 instead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.	. . . . . . . . . . . . . . . . . . . . . . . .Entertheamountonline1thatwasusedfortheperson'ssupport	2.
3.	. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Entertheamountonline1thatwasusedforotherpurposes	3.
4.	. . . . . .Enterthetotalamountintheperson'ssavingsandotheraccountsattheendoftheyear	4.
5.	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Addlines2through4.(Thisamountshouldequalline1.)	5.

Expenses for Entire Household (where the person you supported lived)

6. Lodging (complete line 6a or 6b):

	a. Enter the total rent paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6a.
	b. Enter the fair rental value of the home. If the person you supported owned the home,	6b.
7.	also include this amount in line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	Enter the total food expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7.
8.	Enter the total amount of utilities (heat, light, water, etc., not included in line 6a or 6b) . . . . . . . .	8.
9.	Enter the total amount of repairs (not included in line 6a or 6b) . . . . . . . . . . . . . . . . . . . . . . . . . . .	9.
10.	Enter the total of other expenses. Don’t include expenses of maintaining the home, such as	10.
11.	mortgage interest, real estate taxes, and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	Add lines 6a through 10. These are the total household expenses . . . . . . . . . . . . . . . . . . . . . . . .	11.
12.	Enter total number of persons who lived in the household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12.
13.	Expenses for the Person You Supported	13.
	Divide line 11 by line 12. This is the person's share of the household expenses . . . . . . . . . . . . .
14.	Enter the person's total clothing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14.
15.	Enter the person's total education expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15.
16.	Enter the person's total medical and dental expenses not paid for or reimbursed by	16.
17.	insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	Enter the person's total travel and recreation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17.
18.	Enter the total of the person's other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18.
19.	Add lines 13 through 18. This is the total cost of the person's support for the year . . . . . . . . . . .	19.
20.	Did the Person Provide More Than Half of His or Her Own Support?	20.
	Multiply line 19 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.	Enter the amount from line 2, plus the amount from line 6b if the person you supported owned	21.
	the home. This is the amount the person provided for his or her own support . . . . . . . . . . . . . . .

22. Is line 21 more than line 20?

	No. You meet the support test for this person to be your qualifying child. If this person also meets the other tests to be
	a qualifying child, stop here; don’t complete lines 23–26. Otherwise, go to line 23 and fill out the rest of the worksheet to
	determine if this person is your qualifying relative.
	Yes. You don’t meet the support test for this person to be either your qualifying child or your qualifying relative. Stop
	here.
23.	Did You Provide More Than Half?
	Enter the amount others provided for the person's support. Include amounts provided by state,
	local, and other welfare societies or agencies. Don’t include any amounts included on	23.
	line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24.	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Addlines21and23	24.
25.	. . . . . . .Subtractline24fromline19.Thisistheamountyouprovidedfortheperson'ssupport	25.

26. Is line 25 more than line 20?

Yes. You meet the support test for this person to be your qualifying relative.

No. You don’t meet the support test for this person to be your qualifying relative. You can’t claim this person as a dependent unless you can do so under a multiple support agreement, the support test for children of divorced or separated parents, or the special rule for kidnapped children. See Multiple Support Agreement or Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart), or Kidnapped child under Qualifying Relative.

Page 30Chapter 3Dependents

2. Head of household filing status.

3. The credit for child and dependent care expenses.

4. The exclusion from income for dependent care benefits.

5. The earned income credit.

The other person can’t take any of these benefits based on this qualifying child. In other words, you and the other person can’t agree to divide these benefits between you.

Tiebreaker rules. To determine which person can treat the child as a qualifying child to claim these five tax benefits, the following tiebreaker rules apply.

If only one of the persons is the child's pa-rent, the child is treated as the qualifying child of the parent.

If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.

If the parents don’t file a joint return to-gether but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qual-ifying child of the parent who had the higher adjusted gross income (AGI) for the year.

If no parent can claim the child as a quali-fying child, the child is treated as the quali-fying child of the person who had the high-est AGI for the year.

If a parent can claim the child as a qualify-ing child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child.

Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child.

You may be able to qualify for the TIP earned income credit under the rules for taxpayers without a qualifying child if you have a qualifying child for the earned in-

come credit who is claimed as a qualifying child by another taxpayer. For more information, see Pub. 596.

Example 1—Child lived with parent and grandparent. You and your 3-year-old daugh-ter Jane lived with your mother all year. You are 25 years old, unmarried, and your AGI is $9,000. Your mother's AGI is $15,000. Jane's father didn't live with you or your daughter. You haven't signed Form 8332 (or a similar state-ment).

Jane is a qualifying child of both you and your mother because she meets the relation-ship, age, residency, support, and joint return tests for both you and your mother. However, only one of you can claim her. Jane isn't a quali-fying child of anyone else, including her father.

You agree to let your mother claim Jane. This means your mother can claim Jane as a qualify-ing child for all of the five tax benefits listed ear-lier, if she qualifies for each of those benefits (and if you don’t claim Jane as a qualifying child for any of those tax benefits).

Example 2—Parent has higher AGI than grandparent. The facts are the same as in Ex-ample 1, except your AGI is $18,000. Because your mother's AGI isn't higher than yours, she can’t claim Jane. Only you can claim Jane.

Example 3—Two persons claim same child. The facts are the same as in Example 1, except that you and your mother both claim Jane as a qualifying child. In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. The IRS will disallow your mother's claim to the five tax ben-efits listed earlier based on Jane. However, your mother may qualify for the earned income credit as a taxpayer without a qualifying child.

Example 4—Qualifying children split be-tween two persons. The facts are the same as in Example 1, except you also have two other young children who are qualifying children of both you and your mother. Only one of you can claim each child. However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. For example, if you claim one child, your mother can claim the other two.

Example 5—Taxpayer who is a qualify-ing child. The facts are the same as in Exam-ple 1, except you are only 18 years old and didn't provide more than half of your own sup-port for the year. This means you are your mother's qualifying child. If she can claim you as a dependent, then you can’t claim your daughter as a dependent because of the De-pendent Taxpayer Test, explained earlier.

Example 6—Separated parents. You, your husband, and your 10-year-old son lived together until August 1, 2020, when your hus-band moved out of the household. In August and September, your son lived with you. For the rest of the year, your son lived with your hus-band, the boy's father. Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relation-ship, age, support, and joint return tests for both of you. At the end of the year, you and your hus-band still weren't divorced, legally separated, or separated under a written separation agree-ment, so the rule for children of divorced or sep-arated parents (or parents who live apart) doesn't apply.

You and your husband will file separate re-turns. Your husband agrees to let you treat your son as a qualifying child. This means, if your husband doesn't claim your son as a qualifying child, you can claim your son as a qualifying child for the child tax credit and exclusion for dependent care benefits (if you qualify for each of those tax benefits). However, you can’t claim head of household filing status because you and your husband didn't live apart for the last 6 months of the year. As a result, your filing status is married filing separately, so you can’t claim

the earned income credit or the credit for child and dependent care expenses.

Example 7—Separated parents claim same child. The facts are the same as in Ex-ample 6, except that you and your husband both claim your son as a qualifying child. In this case, only your husband will be allowed to treat your son as a qualifying child. This is because, during 2020, the boy lived with him longer than with you. If you claimed the child tax credit for your son, the IRS will disallow your claim to the child tax credit. If you don’t have another quali-fying child or dependent, the IRS will also disal-low your claim to the exclusion for dependent care benefits. In addition, because you and your husband didn't live apart for the last 6 months of the year, your husband can’t claim head of household filing status. As a result, his filing status is married filing separately, so he can’t claim the earned income credit or the credit for child and dependent care expenses.

Example 8—Unmarried parents. You, your 5-year-old son, and your son's father lived together all year. You and your son's father aren't married. Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. Your AGI is $12,000 and your son's father's AGI is $14,000. Your son's father agrees to let you claim the child as a qualifying child. This means you can claim him as a qualifying child for the child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father doesn't claim your son as a qualifying child for any of those tax benefits).

Example 9—Unmarried parents claim same child. The facts are the same as in Ex-ample 8, except that you and your son's father both claim your son as a qualifying child. In this case, only your son's father will be allowed to treat your son as a qualifying child. This is be-cause his AGI, $14,000, is more than your AGI, $12,000. If you claimed the child tax credit for your son, the IRS will disallow your claim to this credit. If you don’t have another qualifying child or dependent, the IRS will also disallow your claim to head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. However, you may be able to claim the earned income credit as a taxpayer without a qualifying child.

Example 10—Child didn't live with a pa-rent. You and your 7-year-old niece, your si-ster's child, lived with your mother all year. You are 25 years old, and your AGI is $9,300. Your mother's AGI is $15,000. Your niece's parents file jointly, have an AGI of less than $9,000, and don’t live with you or their child. Your niece is a qualifying child of both you and your mother be-cause she meets the relationship, age, resi-dency, support, and joint return tests for both you and your mother. However, only your mother can treat her as a qualifying child. This is because your mother's AGI, $15,000, is more than your AGI, $9,300.

Chapter 3DependentsPage 31

Applying the tiebreaker rules to divorced or separated parents (or parents who live apart). If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or sep-arated parents (or parents who live apart), only the noncustodial parent can claim the child as a dependent and the child tax credit or credit for other dependents for the child. However, only the custodial parent can claim the credit for child and dependent care expenses or the ex-clusion for dependent care benefits for the child, and only the custodial parent can treat the child as a dependent for the health coverage tax credit. Also, the noncustodial parent can't claim the child as a qualifying child for head of household filing status or the earned income credit. Instead, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for those two benefits. If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules just explained determine whether the cus-todial parent or another eligible person can treat the child as a qualifying child.

Example 1. You and your 5-year-old son lived all year with your mother, who paid the en-tire cost of keeping up the home. Your AGI is $10,000. Your mother's AGI is $25,000. Your son's father didn't live with you or your son.

Under the rules explained earlier for children of divorced or separated parents (or parents who live apart), your son is treated as the quali-fying child of his father, who can claim the child tax credit for him. Because of this, you can’t claim the child tax credit for your son. However, those rules don't allow your son's father to claim your son as a qualifying child for head of house-hold filing status, the credit for child and de-pendent care expenses, the exclusion for de-pendent care benefits, the earned income credit, or the health coverage tax credit.

You and your mother didn't have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. Also, neither of you qualifies for the health coverage tax credit. But the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. (The support test doesn't apply for the earned in-come credit.) However, you agree to let your mother claim your son. This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you don’t claim him as a qualifying child for the earned income credit. (You can’t claim head of household filing status because your mother paid the entire cost of keeping up the home.) You may be able to claim the earned income credit as a taxpayer without a qualifying child.

Example 2. The facts are the same as in Example 1, except your AGI is $25,000 and your mother's AGI is $21,000. Your mother can’t claim your son as a qualifying child for any purpose because her AGI isn't higher than yours.

Page 32Chapter 3Dependents

Example 3. The facts are the same as in Example 1, except you and your mother both claim your son as a qualifying child for the earned income credit. Your mother also claims him as a qualifying child for head of household filing status. You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. The IRS will disallow your mother's claim to head of household filing status unless she has another qualifying child or dependent. Your mother can't claim the earned income credit as a taxpayer without a qualifying child because her AGI is more than $15,820.

Qualifying Relative

Four tests must be met for a person to be your qualifying relative. The four tests are:

1. Not a qualifying child test,

2. Member of household or relationship test,

3. Gross income test, and

4. Support test.

Age. Unlike a qualifying child, a qualifying rela-tive can be any age. There is no age test for a qualifying relative.

Kidnapped child. You may be able to treat a child as your qualifying relative even if the child has been kidnapped. See Pub. 501 for details.

Not a Qualifying Child Test

A child isn't your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer.

Example 1. Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. She isn't your qualifying relative.

Example 2. Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. He isn't your qualifying relative.

Example 3. Your son lives with you but isn't your qualifying child because he is 30 years old and doesn't meet the age test. He may be your qualifying relative if the gross income test and the support test are met.

Example 4. Your 13-year-old grandson lived with his mother for 3 months, with his un-cle for 4 months, and with you for 5 months dur-ing the year. He isn't your qualifying child be-cause he doesn't meet the residency test. He may be your qualifying relative if the gross in-come test and the support test are met.

Child of person not required to file a return. A child isn't the qualifying child of any other tax-payer and so may qualify as your qualifying rel-ative if the child's parent (or other person for whom the child is defined as a qualifying child) isn't required to file an income tax return and ei-ther:

Doesn't file an income tax return, or

Files a return only to get a refund of in-come tax withheld or estimated tax paid.

Example 1—Return not required. You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. Your friend has no gross income, isn't required to file a 2020 tax return, and doesn't file a 2020 tax return. Both your friend and her child are your qualifying relatives if the support test is met.

Example 2—Return filed to claim refund. The facts are the same as in Example 1, except your friend had wages of $1,500 during the year and had income tax withheld from her wages. She files a return only to get a refund of the in-come tax withheld and doesn't claim the earned income credit or any other tax credits or deduc-tions. Both your friend and her child are your qualifying relatives if the support test is met.

Example 3—Earned income credit claimed. The facts are the same as in Exam-ple 2, except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. Your friend's child is the qualifying child of another taxpayer (your friend), so you can’t claim your friend's child as your qualifying relative. Also, you can’t claim your friend as your qualifying relative because of the gross income test explained later.

Child in Canada or Mexico. You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. If the child doesn't live with you, the child doesn't meet the residency test to be your qualifying child. How-ever, the child may still be your qualifying rela-tive. If the persons the child does live with aren't U.S. citizens and have no U.S. gross income, those persons aren't “taxpayers,” so the child isn't the qualifying child of any other taxpayer. If the child isn't the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met.

You can’t claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U.S. citizen, U.S. resident alien, or U.S. national. There is an ex-ception for certain adopted children who lived with you all year. See Citizen or Resident Test, earlier.

Example. You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. You are single and live in the United States. Your mother isn't a U.S. citizen and has no U.S. income, so she isn't a “taxpayer.” Your children aren't your qualifying children because they don’t meet the residency test. But since they aren't the qualifying children of any other tax-payer, they are your qualifying relatives and you can claim them as dependents. You may also be able to claim your mother as a dependent if the gross income and support tests are met.

Member of Household or Relationship Test

To meet this test, a person must either:

1. Live with you all year as a member of your household, or

2. Be related to you in one of the ways listed under Relatives who don’t have to live with you next.

If at any time during the year the person was your spouse, that person can’t be your qualify-ing relative.

Relatives who don’t have to live with you. A person related to you in any of the following ways doesn't have to live with you all year as a member of your household to meet this test.

Your child, stepchild, foster child, or a de-scendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)

Your brother, sister, half brother, half sis-ter, stepbrother, or stepsister.

Your father, mother, grandparent, or other direct ancestor, but not foster parent.

Your stepfather or stepmother.

A son or daughter of your brother or sister.

A son or daughter of your half brother or half sister.

A brother or sister of your father or mother.

Your son-in-law, daughter-in-law, fa-ther-in-law, mother-in-law, brother-in-law, or sister-in-law.

Any of these relationships that were established by marriage aren't ended by death or divorce.

Example. You and your wife began sup-porting your wife's father, a widower, in 2014. Your wife died in 2019. Despite your wife's death, your father-in-law continues to meet this test, even if he doesn't live with you. You can claim him as a dependent if all other tests are met, including the gross income test and sup-port test.

Foster child. A foster child is an individual who is placed with you by an authorized place-ment agency or by judgment, decree, or other order of any court of competent jurisdiction.

Joint return. If you file a joint return, the per-son can be related to either you or your spouse. Also, the person doesn't need to be related to the spouse who provides support.

For example, your spouse's uncle who re-ceives more than half of his support from you may be your qualifying relative, even though he doesn't live with you. However, if you and your spouse file separate returns, your spouse's un-cle can be your qualifying relative only if he lives with you all year as a member of your house-hold.

Temporary absences. A person is considered to live with you as a member of your household during periods of time when one of you, or both, are temporarily absent due to special circum-stances such as:

Illness,

Education,

Business,

Vacation,

Military service, or

Detention in a juvenile facility.

If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence may be considered temporary.

Death or birth. A person who died during the year, but lived with you as a member of your household until death, will meet this test. The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth.

If your dependent died during the year and you otherwise qualify to claim that person as a dependent, you can still claim that person as a dependent.

Example. Your mother died on January 15.

She met the tests to be your qualifying relative.

You can claim her as a dependent.

Local law violated. A person doesn't meet this test if at any time during the year the rela-tionship between you and that person violates local law.

Example. Your girlfriend lived with you as a member of your household all year. However, your relationship with her violated the laws of the state where you live because she was mar-ried to someone else. Therefore, she doesn't meet this test and you can’t claim her as a de-pendent.

Adopted child. An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.

Cousin. Your cousin meets this test only if he or she lives with you all year as a member of your household. A cousin is a descendant of a brother or sister of your father or mother.

Gross Income Test

To meet this test, a person's gross income for the year must be less than $4,300.

Gross income defined. Gross income is all income in the form of money, property, and services that isn't exempt from tax.

In a manufacturing, merchandising, or min-ing business, gross income is the total net sales minus the cost of goods sold, plus any miscella-neous income from the business.

Gross receipts from rental property are gross income. Don’t deduct taxes, repairs, or other expenses to determine the gross income from rental property.

Gross income includes a partner's share of the gross (not a share of the net) partnership in-come.

Gross income also includes all taxable un-employment compensation, taxable social se-curity benefits, and certain scholarship and fel-lowship grants. Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally aren't included in gross income. For more information about scholarships, see chapter 8.

Disabled dependent working at sheltered workshop. For purposes of the gross income test, the gross income of an individual who is permanently and totally disabled at any time during the year doesn't include income for serv-ices the individual performs at a sheltered work-shop. The availability of medical care at the workshop must be the main reason for the indi-vidual's presence there. Also, the income must come solely from activities at the workshop that are incident to this medical care.

A “sheltered workshop” is a school that:

Provides special instruction or training de-signed to alleviate the disability of the indi-vidual; and

Is operated by certain tax-exempt organi-zations, or by a state, a U.S. possession, a political subdivision of a state or posses-sion, the United States, or the District of Columbia.

Permanently and totally disabled has the same meaning here as under Qualifying Child, earlier.

Support Test (To Be a Qualifying Relative)

To meet this test, you must generally provide more than half of a person's total support during the calendar year.

However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement, later.

How to determine if support test is met. You figure whether you have provided more than half of a person's total support by compar-ing the amount you contributed to that person's support with the entire amount of support that person received from all sources. This includes support the person provided from his or her own funds.

You may find Worksheet 3-1 helpful in figur-ing whether you provided more than half of a person's support.

Person's own funds not used for support. A person's own funds aren't support unless they are actually spent for support.

Example. Your mother received $2,400 in social security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recre-ation. She put $300 in a savings account.

Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support.

Child's wages used for own support. You can’t include in your contribution to your child's support any support paid for by the child with the child's own wages, even if you paid the wa-ges.

Year support is provided. The year you pro-vide the support is the year you pay for it, even if you do so with borrowed money that you re-pay in a later year.

If you use a fiscal year to report your in-come, you must provide more than half of the

Chapter 3DependentsPage 33

dependent's support for the calendar year in which your fiscal year begins.

Armed Forces dependency allotments. The part of the allotment contributed by the govern-ment and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the sup-port. If your allotment is used to support per-sons other than those you name, you can claim them as dependents if they otherwise qualify.

Example. You are in the Armed Forces.

agency. See Foster care payments and expen-ses, earlier.

Home for the aged. If you make a lump-sum advance payment to a home for the aged to take care of your relative for life and the pay-ment is based on that person's life expectancy, the amount of support you provide each year is the lump-sum payment divided by the relative's life expectancy. The amount of support you pro-vide also includes any other amounts you provi-ded during the year.

Support provided	Father		Mother

Fair rental value of lodging . . .	$1,000	$1,000
Pension spent for their	2,100	2,100
support . . . . . . . . . . . . .
Share of food (1/6 of	1,000	1,000
$6,000)............
Medical expenses for			600
mother . . . . . . . . . . . . .
Parents' total support . . . .	$4,100	$4,700

You authorize an allotment for your widowed mother that she uses to support herself and her sister. If the allotment provides more than half of each person's support, you can claim each of them as a dependent, if they otherwise qualify, even though you authorize the allotment only for your mother.

Tax-exempt military quarters allowances. These allowances are treated the same way as dependency allotments in figuring support. The allotment of pay and the tax-exempt basic al-lowance for quarters are both considered as provided by you for support.

Tax-exempt income. In figuring a person's to-tal support, include tax-exempt income, sav-ings, and borrowed amounts used to support that person. Tax-exempt income includes cer-

Total Support

To figure if you provided more than half of a person's support, you must first determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and sim-ilar necessities.

Generally, the amount of an item of support is the amount of the expense incurred in provid-ing that item. For lodging, the amount of support is the fair rental value of the lodging.

Expenses not directly related to any one member of a household, such as the cost of food for the household, must be divided among the members of the household.

You must apply the support test separately to each parent. You provide $2,000 ($1,000 lodging + $1,000 food) of your father's total sup-port of $4,100—less than half. You provide $2,600 to your mother ($1,000 lodging + $1,000 food + $600 medical) —more than half of her to-tal support of $4,700. You meet the support test for your mother, but not your father. Heat and utility costs are included in the fair rental value of the lodging, so these aren't considered sepa-rately.

Lodging. If you provide a person with lodging, you are considered to provide support equal to the fair rental value of the room, apartment, house, or other shelter in which the person lives. Fair rental value includes a reasonable al-lowance for the use of furniture and appliances, and for heat and other utilities that are provided.

tain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest.

Example 1. You provide $4,000 toward your mother's support during the year. She has earned income of $600, nontaxable social se-curity benefits of $4,800, and tax-exempt inter-est of $200. She uses all these for her support. You can’t claim your mother as a dependent be-cause the $4,000 you provide isn't more than half of her total support of $9,600 ($4,000 + $600 + $4,800 + $200).

Example 2. Your niece takes out a student loan of $2,500 and uses it to pay her college tui-tion. She is personally responsible for the loan. You provide $2,000 toward her total support. You can’t claim her as a dependent because you provide less than half of her support.

Social security benefits. If a married cou-ple receives benefits that are paid by one check made out to both of them, half of the total paid is considered to be for the support of each spouse, unless they can show otherwise.

If a child receives social security benefits and uses them toward his or her own support, the benefits are considered as provided by the child.

Support provided by the state (welfare, food stamps, housing, etc.). Benefits provi-ded by the state to a needy person are gener-ally considered support provided by the state. However, payments based on the needs of the recipient won't be considered as used entirely for that person's support if it is shown that part of the payments weren't used for that purpose.

Foster care. Payments you receive for the support of a foster child from a child placement agency are considered support provided by the

Page 34Chapter 3Dependents

*Example 1.* Grace Brown, mother of Mary				*Fair rental value defined.* Fair rental value
Miller, lives with Frank and Mary Miller and their
				is the amount you could reasonably expect to
two children. Grace gets social security benefits
				receive from a stranger for the same kind of
of $2,400, which she spends for clothing, trans-
				lodging. It is used instead of actual expenses
portation, and recreation. Grace has no other
				such as taxes, interest, depreciation, paint, in-
income. Frank and Mary's total food expense
				surance, utilities, and the cost of furniture and
for the household is $5,200. They pay Grace's
				appliances. In some cases, fair rental value
medical and drug expenses of $1,200. The fair
				may be equal to the rent paid.
rental value of the lodging provided for Grace is
				If you provide the total lodging, the amount
$1,800 a year,	based on the	cost	of similar
				of support you provide is the fair rental value of
rooming facilities. Figure Grace's total support
				the room the person uses, or a share of the fair
as follows.
				rental value of the entire dwelling if the person
Fair rental value of lodging . . . . . . . .			$ 1,800	has use of your entire home. If you don’t pro-
				vide the total lodging, the total fair rental value
Clothing, transportation, and			2,400	must be divided depending on how much of the
recreation . . . . . . . . . . . . . . . . .				total lodging you provide. If you provide only a
Medical expenses . . . . . . . . . . . . .			1,200	part and the person supplies the rest, the fair
Share of food (1/5 of $5,200) . . . . . . .			1,040	rental value must be divided between both of
				you according to the amount each provides.
Total support . . . . . . . . . . . . . . .			$6,440	*Example.* Your parents live rent free in a

The support	Frank and	Mary	provide,	house you own. It has a fair rental value of
				$5,400 a year furnished, which includes a fair
$4,040 ($1,800 lodging + $1,200 medical ex-
				rental value of $3,600 for the house and $1,800
penses + $1,040 food), is more than half of
				for the furniture. This doesn't include heat and
Grace's $6,440 total support.
				utilities. The house is completely furnished with

*Example 2.* Your parents live with you, your				furniture belonging to your parents. You pay
spouse, and your two children in a house you				$600 for their utility bills. Utilities usually aren't
own. The fair rental value of your parents' share				included in rent for houses in the area where
of the lodging is $2,000 a year ($1,000 each),				your parents live. Therefore, you consider the
which includes furnishings and utilities. Your fa-				total fair rental value of the lodging to be $6,000
ther receives a nontaxable pension of $4,200,				($3,600 fair rental value of the unfurnished
which he spends equally between your mother				house + $1,800 allowance for the furnishings
and himself for items of support such as cloth-				provided by your parents + $600 cost of utilities)
ing, transportation, and recreation. Your total				of which you are considered to provide $4,200
food expense for the household is $6,000. Your				($3,600 + $600).
heat and utility bills amount to $1,200. Your				*Person living in his or her own home.*
mother has hospital and medical expenses of				The total fair rental value of a person's home
$600, which you pay during the year. Figure				that he or she owns is considered support con-
your parents' total support as follows.				tributed by that person.

Living with someone rent free. If you live

with a person rent free in his or her home, you

must reduce the amount you provide for sup-port of that person by the fair rental value of lodging he or she provides you.

Property. Property provided as support is measured by its fair market value. Fair market value is the price that property would sell for on the open market. It is the price that would be agreed upon between a willing buyer and a will-ing seller, with neither being required to act, and both having reasonable knowledge of the rele-vant facts.

Capital expenses. Capital items, such as furniture, appliances, and cars, bought for a person during the year can be included in total support under certain circumstances.

The following examples show when a capi-tal item is or isn't support.

Example 1. You buy a $200 power lawn mower for your 13-year-old child. The child is given the duty of keeping the lawn trimmed. Be-cause the lawn mower benefits all members of the household, don’t include the cost of the lawn mower in the support of your child.

Example 2. You buy a $150 television set as a birthday present for your 12-year-old child. The television set is placed in your child's bed-room. You can include the cost of the television set in the support of your child.

Example 3. You pay $5,000 for a car and register it in your name. You and your 17-year-old daughter use the car equally. Be-cause you own the car and don’t give it to your daughter but merely let her use it, don’t include the cost of the car in your daughter's total sup-port. However, you can include in your daugh-ter's support your out-of-pocket expenses of operating the car for her benefit.

Example 4. Your 17-year-old son, using personal funds, buys a car for $4,500. You pro-vide the rest of your son's support, $4,000. Be-cause the car is bought and owned by your son, the car's fair market value ($4,500) must be in-cluded in his support. Your son has provided more than half of his own total support of $8,500 ($4,500 + $4,000), so he isn't your quali-fying child. You didn't provide more than half of his total support, so he isn't your qualifying rela-tive. You can’t claim your son as a dependent.

Medical insurance premiums. Medical insur-ance premiums you pay, including premiums for supplementary Medicare coverage, are inclu-ded in the support you provide.

Medical insurance benefits. Medical in-surance benefits, including basic and supple-mentary Medicare benefits, aren't part of sup-port.

Tuition payments and allowances under the GI Bill. Amounts veterans receive under the GI Bill for tuition payments and allowances while they attend school are included in total support.

Example. During the year, your son re-ceives $2,200 from the government under the GI Bill. He uses this amount for his education. You provide the rest of his support, $2,000. Be-cause GI benefits are included in total support, your son's total support is $4,200 ($2,200 +

$2,000). You haven't provided more than half of his support.

Child care expenses. If you pay someone to provide child or dependent care, you can in-clude these payments in the amount you provi-ded for the support of your child or disabled de-pendent, even if you claim a credit for the payments. For information on the credit, see Pub. 503, Child and Dependent Care Expen-ses.

Other support items. Other items may be considered as support depending on the facts in each case.

Don’t Include in Total Support

The following items aren't included in total sup-port.

1. Federal, state, and local income taxes paid by persons from their own income.

2. Social security and Medicare taxes paid by persons from their own income.

3. Life insurance premiums.

4. Funeral expenses.

5. Scholarships received by your child if your child is a student.

6. Survivors' and Dependents' Educational Assistance payments used for the support of the child who receives them.

Multiple Support Agreement

Sometimes no one provides more than half of the support of a person. Instead, two or more persons, each of whom would be able to claim the person as a dependent but for the support test, together provide more than half of the per-son's support.

When this happens, you can agree that any one of you who individually provides more than 10% of the person's support, but only one, can claim the person as a dependent. Each of the others must sign a statement agreeing not to claim the person as a dependent for that year. The person who claims the person as a de-pendent must keep these signed statements for his or her records. A multiple support declara-tion identifying each of the others who agreed not to claim the person as a dependent must be attached to the return of the person claiming the person as a dependent. Form 2120 can be used for this purpose.

You can claim someone as a dependent un-der a multiple support agreement for someone related to you or for someone who lived with you all year as a member of your household.

Example 1. You, your sister, and your two brothers provide the entire support of your mother for the year. You provide 45%, your sis-ter 35%, and your two brothers each provide 10%. Either you or your sister can claim your mother as a dependent. The other must sign a statement agreeing not to claim your mother as a dependent. The one who claims your mother as a dependent must attach Form 2120, or a similar declaration, to his or her return and must keep the statement signed by the other for his or her records. Because neither brother pro-vides more than 10% of the support, neither can

claim your mother as a dependent and neither has to sign a statement.

Example 2. You and your brother each pro-vide 20% of your mother's support for the year. The remaining 60% of her support is provided equally by two persons who aren't related to her. She doesn't live with them. Because more than half of her support is provided by persons who can’t claim her as a dependent, no one can claim her as a dependent.

Example 3. Your father lives with you and receives 25% of his support from social secur-ity, 40% from you, 24% from his brother (your uncle), and 11% from a friend. Either you or your uncle can claim your father as a depend-ent if the other signs a statement agreeing not to. The one who claims your father as a de-pendent must attach Form 2120, or a similar declaration, to his return and must keep for his records the signed statement from the one agreeing not to claim your father as a depend-ent.

Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart)

In most cases, a child of divorced or separated parents (or parents who live apart) will be a qualifying child of one of the parents. See Chil-dren of divorced or separated parents (or pa-rents who live apart) under Qualifying Child, earlier. However, if the child doesn't meet the requirements to be a qualifying child of either parent, the child may be a qualifying relative of one of the parents. If you think this might apply to you, see Pub. 501.

Social Security Numbers for Dependents

You must show the social security number (SSN) of any dependent you list in the Depend-ents section of your Form 1040 or 1040-SR.

If you don’t show the dependent's SSN

when required, or if you show an incor-CAUTION rect SSN, certain tax benefits may be disallowed.

No SSN. If a person whom you expect to claim as a dependent on your return doesn't have an SSN, either you or that person should apply for an SSN as soon as possible by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration (SSA). You can get Form SS-5 online at SSA.gov or at your local SSA office.

It usually takes about 2 weeks to get an SSN once the SSA has all the information it needs. If you don’t have a required SSN by the filing due date, you can file Form 4868 for an extension of time to file.

Born and died in 2020. If your child was born and died in 2020, and you don’t have an SSN for the child, you may attach a copy of the child's birth certificate, death certificate, or hos-pital records instead. The document must show the child was born alive. If you do this, enter

Chapter 3DependentsPage 35

“DIED” in column (2) of the Dependents section of your Form 1040 or 1040-SR.

Alien or adoptee with no SSN. If your de-pendent doesn't have and can’t get an SSN, you must list the individual taxpayer identifica-tion number (ITIN) or adoption taxpayer identifi-cation number (ATIN) instead of an SSN.

Taxpayer identification numbers for ali-ens. If your dependent is a resident or nonresi-dent alien who doesn't have and isn't eligible to get an SSN, your dependent must apply for an individual taxpayer identification number (ITIN). For details on how to apply, see Form W-7, Ap-plication for IRS Individual Taxpayer Identifica-tion Number.

Taxpayer identification numbers for adoptees. If you have a child who was placed with you by an authorized placement agency, you may be able to claim the child as a depend-ent. However, if you can’t get an SSN or an ITIN for the child, you must get an adoption taxpayer identification number (ATIN) for the child from the IRS. See Form W-7A, Application for Tax-payer Identification Number for Pending U.S. Adoptions, for details.

4.

Tax Withholding and Estimated Tax

What's New for 2020

Extended due dates for estimated tax pay-ments. The due date for filing estimated tax forms and paying estimated taxes has been postponed to July 15, 2020.

What's New for 2021

Tax law changes for 2021. When you figure how much income tax you want withheld from your pay and when you figure your estimated tax, consider tax law changes effective in 2021. For more information, see Pub. 505, Tax With-holding and Estimated Tax.

Reminders

Estimated tax safe harbor for higher in-come taxpayers. If your 2020 adjusted gross income was more than $150,000 ($75,000 if you are married filing a separate return), you must pay the smaller of 90% of your expected

tax for 2021 or 110% of the tax shown on your 2020 return to avoid an estimated tax penalty.

Introduction

This chapter discusses how to pay your tax as you earn or receive income during the year. In general, the federal income tax is a pay-as-you-go tax. There are two ways to pay as you go.

Withholding. If you are an employee, your employer probably withholds income tax from your pay. Tax may also be withheld from certain other income, such as pen-sions, bonuses, commissions, and gam-bling winnings. The amount withheld is paid to the IRS in your name.

Estimated tax. If you don't pay your tax through withholding, or don't pay enough tax that way, you may have to pay estima-ted tax. People who are in business for themselves will generally have to pay their tax this way. Also, you may have to pay es-timated tax if you receive income such as dividends, interest, capital gains, rent, and royalties. Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well.

This chapter explains these methods. In ad-dition, it also explains the following.

Credit for withholding and estimated tax. When you file your 2020 income tax return, take credit for all the income tax withheld from your salary, wages, pen-sions, etc., and for the estimated tax you paid for 2020. Also take credit for any ex-cess social security or railroad retirement tax withheld. See Pub. 505.

Underpayment penalty. If you didn't pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. In most cases, the IRS can figure this pen-alty for you. See Underpayment Penalty for 2020 at the end of this chapter.

Useful Items

You may want to see:

Publication

505 Tax Withholding and Estimated Tax

Form (and Instructions) W-4 Employee's Withholding Certificate

W-4P Withholding Certificate for Retirement or Annuity Payments

W-4S Request for Federal Income Tax Withholding From Sick Pay

W-4V Voluntary Withholding Request 1040-ES Estimated Tax for Individuals

2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts

2210-F Underpayment of Estimated Tax

by Farmers and Fishermen

Tax Withholding for 2021

This section discusses income tax withholding on:

Salaries and wages,

Tips,

Taxable fringe benefits,

Sick pay,

Pensions and annuities,

Gambling winnings,

Unemployment compensation, and

Certain federal payments.

This section explains the rules for withholding tax from each of these types of income.

This section also covers backup withholding on interest, dividends, and other payments.

Salaries and Wages

Income tax is withheld from the pay of most em-ployees. Your pay includes your regular pay, bonuses, commissions, and vacation allowan-ces. It also includes reimbursements and other expense allowances paid under a nonaccounta-ble plan. See Supplemental Wages, later, for more information about reimbursements and al-lowances paid under a nonaccountable plan.

If your income is low enough that you won't have to pay income tax for the year, you may be exempt from withholding. This is explained un-der Exemption From Withholding, later.

You can ask your employer to withhold in-come tax from noncash wages and other wages not subject to withholding. If your employer doesn't agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2021.

Military retirees. Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes.

Household workers. If you are a household worker, you can ask your employer to withhold income tax from your pay. A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter.

Tax is withheld only if you want it withheld and your employer agrees to withhold it. If you don't have enough income tax withheld, you may have to pay estimated tax, as discussed later under Estimated Tax for 2021.

Farmworkers. Generally, income tax is with-held from your cash wages for work on a farm unless your employer does both of these:

Pays you cash wages of less than $150 during the year, and

Has expenditures for agricultural labor to-taling less than $2,500 during the year.

Differential wage payments. When employ-ees are on leave from employment for military duty, some employers make up the difference

Page 36Chapter 4Tax Withholding and Estimated Tax

between the military pay and civilian pay. Pay-ments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security, Medicare, or federal unemployment (FUTA) tax withholding. The wages and with-holding will be reported on Form W-2, Wage and Tax Statement.

Determining Amount of Tax Withheld Using Form W-4

The amount of income tax your employer with-holds from your regular pay depends on two things.

The amount you earn in each payroll pe-riod.

The information you give your employer on Form W-4.

Form W-4 includes steps to help you figure your withholding. Complete Steps 2 through 4 only if they apply to you.

Step 1. Enter your personal information in-cluding your filing status.

Step 2. Complete this step if you have more than one job at the same time or are married filing jointly and you and your spouse both work.

Step 3. Complete this step if you claim de-pendents.

Step 4. Complete this optional step to make other adjustments.

*Other income *Deductions *Extra withholding

New Job

When you start a new job, you must fill out Form W-4 and give it to your employer. Your em-ployer should have copies of the form. If you need to change the information later, you must fill out a new form.

If you work only part of the year (for exam-ple, you start working after the beginning of the year), too much tax may be withheld. You may be able to avoid overwithholding if your em-ployer agrees to use the part-year method. See Part-Year Method in chapter 1 of Pub. 505 for more information.

Employee also receiving pension income. If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. However, you can choose to split your withholding between your pension and job in any manner.

Changing Your Withholding

During the year, changes may occur to your marital status, adjustments, deductions, or credits you expect to claim on your tax return. When this happens, you may need to give your employer a new Form W-4 to change your with-holding status.

Generally, you can submit a new Form W-4 whenever you wish to change the information you entered on your Form W-4 for any reason.

Changing your withholding for 2022. If events in 2021 will change the amount of with-

holding you should claim for 2022, you must give your employer a new Form W-4 by Decem-ber 1, 2021. If the event occurs in December 2021, submit a new Form W-4 within 10 days.

Checking Your Withholding

After you have given your employer a Form W -4, you can check to see whether the amount of tax withheld from your pay is too little or too much. If too much or too little tax is being with-held, you should give your employer a new Form W-4 to change your withholding. You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund. Always check your withholding if there are personal or finan-cial changes in your life or changes in the law that might change your tax liability.

Note. You can’t give your employer a pay-ment to cover withholding on salaries and wa-ges for past pay periods or a payment for esti-mated tax.

Completing Form W-4 and Worksheets

Form W-4 has worksheets to help you figure the correct amount of withholding you can claim. The worksheets are for your own records. Don't give them to your employer.

Multiple Jobs Worksheet. If you have income from more than one job at the same time, or are married filing jointly and you and your spouse both work, complete the Multiple Jobs Work-sheet on the Form W-4.

If you and your spouse expect to file sepa-rate returns, figure your withholding using sepa-rate worksheets based on your own individual income, adjustments, deductions, and credits.

Deductions Worksheet. Use the Deductions Worksheet on Form W-4 if you plan to itemize deductions or claim certain adjustments to in-come and you want to reduce your withholding. Also complete this worksheet when you have changes to these items to see if you need to change your withholding.

Getting the Right Amount of Tax Withheld

In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules.

You accurately complete all the Form W-4 worksheets that apply to you.

You give your employer a new Form W-4 when changes occur.

But because the worksheets and withhold-ing methods don't account for all possible situa-tions, you may not be getting the right amount withheld. This is most likely to happen in the fol-lowing situations.

You are married and both you and your spouse work.

You have more than one job at a time.

Chapter 4

You have nonwage income, such as inter-est, dividends, alimony, unemployment compensation, or self-employment in-come.

You will owe additional amounts with your return, such as self-employment tax.

Your withholding is based on obsolete Form W-4 information for a substantial part of the year.

You work only part of the year.

You change the amount of your withhold-ing during the year.

Cumulative wage method. If you change the amount of your withholding during the year, too much or too little tax may have been withheld for the period before you made the change. You may be able to compensate for this if your em-ployer agrees to use the cumulative wage with-holding method for the rest of the year. You must ask your employer in writing to use this method.

To be eligible, you must have been paid for the same kind of payroll period (weekly, bi-weekly, etc.) since the beginning of the year.

Publication 505

To make sure you are getting the right amount of tax withheld, get Pub. 505. It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. It will also help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. If you don't have enough tax with-held, you may have to pay estimated tax, as ex-plained under Estimated Tax for 2021, later.

You can use the Tax Withholding Esti-TIP mator at IRS.gov/W4App, instead of Pub. 505 or the worksheets included with Form W-4, to determine whether you need

to have your withholding increased or de-creased.

Rules Your Employer Must Follow

It may be helpful for you to know some of the withholding rules your employer must follow. These rules can affect how to fill out your Form W-4 and how to handle problems that may arise.

New Form W-4. When you start a new job, your employer should have you complete a Form W-4. Beginning with your first payday, your employer will use the information you give on the form to figure your withholding.

If you later fill out a new Form W-4, your em-ployer can put it into effect as soon as possible. The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in.

No Form W-4. If you don't give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were sin-gle.

Repaying withheld tax. If you find you are having too much tax withheld because you didn't claim the correct amount of withholding you are entitled to, you should give your

Tax Withholding and Estimated TaxPage 37

employer a new Form W-4. Your employer can’t repay any of the tax previously withheld. In-stead, claim the full amount withheld when you file your tax return.

However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you don't have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Your employer can repay the amount that was withheld incor-rectly. If you aren’t repaid, your Form W-2 will reflect the full amount actually withheld, which you would claim when you file your tax return.

Exemption From Withholding

If you claim exemption from withholding, your employer won't withhold federal income tax from your wages. The exemption applies only to income tax, not to social security, Medicare, or FUTA tax withholding.

You can claim exemption from withholding for 2021 only if both of the following situations apply.

For 2020, you had a right to a refund of all federal income tax withheld because you had no tax liability.

For 2021, you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Students. If you are a student, you aren’t auto-matically exempt. See chapter 1 to find out if you must file a return. If you work only part time or only during the summer, you may qualify for exemption from withholding.

Age 65 or older or blind. If you are 65 or older or blind, use Worksheet 1-1 or 1-2 in chapter 1 of Pub. 505 to help you decide if you qualify for exemption from withholding. Don't use either worksheet if you will itemize deduc-tions or claim tax credits on your 2021 return. Instead, see Itemizing deductions or claiming credits in chapter 1 of Pub. 505.

Claiming exemption from withholding. To claim exemption, you must give your employer a Form W-4. Write “Exempt” on the form in the space below Step 4(c) and complete the appli-cable steps of the form.

If you claim exemption, but later your situa-tion changes so that you will have to pay in-come tax after all, you must file a new Form W-4 within 10 days after the change. If you claim exemption in 2021, but you expect to owe income tax for 2022, you must file a new Form W-4 by December 1, 2021.

Your claim of exempt status may be re-viewed by the IRS.

An exemption is good for only 1 year. You must give your employer a new Form W-4 by February 15 each year to continue your ex-emption.

Supplemental Wages

Supplemental wages include bonuses, commis-sions, overtime pay, vacation allowances, cer-tain sick pay, and expense allowances under certain plans. The payer can figure withholding on supplemental wages using the same method used for your regular wages. However, if these payments are identified separately from your

regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate.

Expense allowances. Reimbursements or other expense allowances paid by your em-ployer under a nonaccountable plan are treated as supplemental wages.

Reimbursements or other expense allowan-ces paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you don't return the excess payments within a reasonable period of time.

For more information about accountable and nonaccountable expense allowance plans, see Pub. 505.

Penalties

You may have to pay a penalty of $500 if both of the following apply.

You make statements or claim withholding on your Form W-4 that reduce the amount of tax withheld.

You have no reasonable basis for those statements or withholding at the time you prepare your Form W-4.

There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply in-formation that would increase the amount with-held. The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both.

These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an at-tempt to reduce or eliminate the proper with-holding of taxes. A simple error or an honest mistake won't result in one of these penalties.

Tips

The tips you receive while working on your job are considered part of your pay. You must in-clude your tips on your tax return on the same line as your regular pay. However, tax isn't with-held directly from tip income, as it is from your regular pay. Nevertheless, your employer will take into account the tips you report when figur-ing how much to withhold from your regular pay.

For more information on reporting your tips to your employer and on the withholding rules for tip income, see Pub. 531, Reporting Tip In-come.

How employer figures amount to withhold. The tips you report to your employer are coun-ted as part of your income for the month you re-port them. Your employer can figure your with-holding in either of two ways.

By withholding at the regular rate on the sum of your pay plus your reported tips.

By withholding at the regular rate on your pay plus a percentage of your reported tips.

Not enough pay to cover taxes. If your regu-lar pay isn't enough for your employer to with-hold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to

cover the shortage. See Pub. 531 for more in-formation.

Allocated tips. Your employer shouldn't with-hold income tax, Medicare tax, social security tax, or railroad retirement tax on any allocated tips. Withholding is based only on your pay plus your reported tips. Your employer should refund to you any incorrectly withheld tax. See Pub. 531 for more information.

Taxable Fringe Benefits

The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Your employer must generally with-hold income tax on these benefits from your regular pay.

For information on fringe benefits, see Fringe Benefits under Employee Compensation in chapter 5.

Although the value of your personal use of an employer-provided car, truck, or other high-way motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Your employer must notify you if this choice is made.

For more information on withholding on tax-able fringe benefits, see chapter 1 of Pub. 505.

Sick Pay

Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. To qualify as sick pay, it must be paid under a plan to which your employer is a party.

If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. An agent who doesn't pay regular wages to you may choose to withhold income tax at a flat rate.

However, if you receive sick pay from a third party who isn't acting as an agent of your em-ployer, income tax will be withheld only if you choose to have it withheld. See Form W-4S, later.

If you receive payments under a plan in which your employer doesn't participate (such as an accident or health plan where you paid all the premiums), the payments aren’t sick pay and usually aren’t taxable.

Union agreements. If you receive sick pay un-der a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax with-holding. See your union representative or your employer for more information.

Form W-4S. If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W -4S. Its instructions contain a worksheet you can use to figure the amount you want with-held. They also explain restrictions that may ap-ply.

Give the completed form to the payer of your sick pay. The payer must withhold according to your directions on the form.

Estimated tax. If you don't request withholding on Form W-4S, or if you don't have enough tax withheld, you may have to make estimated tax

Page 38Chapter 4Tax Withholding and Estimated Tax

payments. If you don't pay enough tax, either through estimated tax or withholding, or a com-bination of both, you may have to pay a penalty. See Underpayment Penalty for 2020 at the end of this chapter.

Pensions and Annuities

Income tax will usually be withheld from your pension or annuity distributions unless you choose not to have it withheld. This rule applies to distributions from:

A traditional individual retirement arrange-ment (IRA);

A life insurance company under an endow-ment, annuity, or life insurance contract;

A pension, annuity, or profit-sharing plan;

A stock bonus plan; and

Any other plan that defers the time you re-ceive compensation.

The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible roll-over distribution (ERD). Income tax withholding from an ERD is mandatory.

More information. For more information on withholding on pensions and annuities, includ-ing a discussion of Form W -4P, see Pensions and Annuities in chapter 1 of Pub. 505.

Gambling Winnings

Income tax is withheld at a flat 24% rate from certain kinds of gambling winnings.

Gambling winnings of more than $5,000 from the following sources are subject to in-come tax withholding.

Any sweepstakes; wagering pool, includ-ing payments made to winners of poker tournaments; or lottery.

Any other wager, if the proceeds are at least 300 times the amount of the bet.

It doesn't matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value.

Exception. Gambling winnings from bingo, keno, and slot machines generally aren’t sub-ject to income tax withholding. However, you may need to provide the payer with a social se-curity number to avoid withholding. See Backup withholding on gambling winnings in chapter 1 of Pub. 505. If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. See Estimated Tax for 2021, later.

If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Un-derpayment Penalty for 2020 at the end of this chapter.

Form W-2G. If a payer withholds income tax from your gambling winnings, you should re-ceive a Form W-2G, Certain Gambling Win-nings, showing the amount you won and the amount withheld. Report the tax withheld on Form 1040 or 1040-SR, line 25c.

Unemployment

Compensation

You can choose to have income tax withheld from unemployment compensation. To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

All unemployment compensation is taxable. If you don't have income tax withheld, you may have to pay estimated tax. See Estimated Tax for 2021, later.

If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Un-derpayment Penalty for 2020 at the end of this chapter.

Federal Payments

You can choose to have income tax withheld from certain federal payments you receive. These payments are the following.

1. Social security benefits.

2. Tier 1 railroad retirement benefits.

3. Commodity credit corporation loans you choose to include in your gross income.

4. Payments under the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), as amen-ded, or title II of the Disaster Assistance Act of 1988, that are treated as insurance proceeds and that you receive because:

a. Your crops were destroyed or dam-aged by drought, flood, or any other natural disaster; or

b. You were unable to plant crops be-cause of a natural disaster described in (a).

5. Any other payment under federal law as determined by the Secretary.

To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

If you don't choose to have income tax with-held, you may have to pay estimated tax. See Estimated Tax for 2021, later.

If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See Un-derpayment Penalty for 2020 at the end of this chapter.

More information. For more information about the tax treatment of social security and railroad retirement benefits, see chapter 7. Get Pub. 225, Farmer's Tax Guide, for information about the tax treatment of commodity credit corpora-tion loans or crop disaster payments.

Backup Withholding

Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. The information re-turn shows how much you were paid during the year. It also includes your name and taxpayer identification number (TIN). TINs are explained in chapter 1 under Social Security Number (SSN).

These payments generally aren’t subject to withholding. However, “backup” withholding is required in certain situations. Backup withhold-ing can apply to most kinds of payments that are reported on Form 1099.

The payer must withhold at a flat 24% rate in the following situations.

You don't give the payer your TIN in the re-quired manner.

The IRS notifies the payer that the TIN you gave is incorrect.

You are required, but fail, to certify that you aren’t subject to backup withholding.

The IRS notifies the payer to start withhold-ing on interest or dividends because you have underreported interest or dividends on your income tax return. The IRS will do this only after it has mailed you four noti-ces.

Go to IRS.gov/Businesses/Small-Businesses-Self-Employed/Backup-Withholding for more information on kinds of payments subject to backup withholding.

Penalties. There are civil and criminal penal-ties for giving false information to avoid backup withholding. The civil penalty is $500. The crimi-nal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both.

Estimated Tax for 2021

Estimated tax is the method used to pay tax on income that isn't subject to withholding. This in-cludes income from self -employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income isn't enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you don't pay enough tax, either through with-holding or estimated tax, or a combination of both, you may have to pay a penalty. If you don't pay enough by the due date of each pay-ment period (see When To Pay Estimated Tax, later), you may be charged a penalty even if you are due a refund when you file your tax return. For information on when the penalty applies, see Underpayment Penalty for 2020 at the end of this chapter.

Who Doesn't Have To Pay Estimated Tax

If you receive salaries or wages, you can avoid having to pay estimated tax by asking your em-ployer to take more tax out of your earnings. To do this, give a new Form W-4 to your employer. See chapter 1 of Pub. 505.

Estimated tax not required. You don't have to pay estimated tax for 2021 if you meet all three of the following conditions.

You had no tax liability for 2020.

You were a U.S. citizen or resident alien for the whole year.

Chapter 4Tax Withholding and Estimated TaxPage 39

Figure 4-A. Do You Have To Pay Estimated Tax?

Start Here

Will you owe $1,000 or more for 2021 after subtracting income tax withholding and refundable credits* from your total tax? (Don’t subtract any estimated tax payments.)

No

Yes

Will your income tax

withholding and refundable

credits* be at least 90%

(662/3% for farmers and

shermen) of the tax shown on

your 2021 tax return?

Yes

You are NOT required to pay estimated tax.

No

Will your income tax withholding and refundable credits* be at least 100%** of the tax shown on your 2020 tax return?

Note. Your 2020 return must have covered a 12-month period.

Yes

You MUST make estimated tax payment(s) by the required due date(s).

See When To Pay

Estimated Tax.

No

*Use the refundable credits shown on the 2021 Estimated Tax Worksheet in Pub. 505.

**110% if less than two-thirds of your gross income for 2020 and 2021 is from farming or shing and your 2020 adjusted gross income was more than $150,000 ($75,000 if your ling status for 2021 is married ling a separate return).

Your 2020 tax year covered a 12-month period.

You had no tax liability for 2020 if your total tax was zero or you didn't have to file an income tax return. For the definition of “total tax” for 2020, see Pub. 505, chapter 2.

Who Must Pay Estimated Tax

If you owe additional tax for 2020, you may have to pay estimated tax for 2021.

You can use the following general rule as a guide during the year to see if you will have enough withholding, or if you should increase your withholding or make estimated tax pay-ments.

General rule. In most cases, you must pay es-timated tax for 2021 if both of the following ap-ply.

1. You expect to owe at least $1,000 in tax for 2021, after subtracting your withholding and refundable credits.

2. You expect your withholding plus your re-fundable credits to be less than the smaller of:

a. 90% of the tax to be shown on your

2021 tax return, or

b. 100% of the tax shown on your 2020 tax return (but see Special rules for farmers, fishermen, and higher in-come taxpayers, later). Your 2020 tax return must cover all 12 months.

If the result from using the general rule

above suggests that you won't have CAUTION enough withholding, complete the 2021 Estimated Tax Worksheet in Pub. 505 for a more accurate calculation.

Special rules for farmers, fishermen, and higher income taxpayers. If at least two-thirds of your gross income for tax year 2020 or 2021 is from farming or fishing, substi-tute 662/3% for 90% in (2a) under the General rule, earlier. If your AGI for 2020 was more than $150,000 ($75,000 if your filing status for 2021 is married filing a separate return), substitute 110% for 100% in (2b) under General rule, ear-lier. See Figure 4-A and Pub. 505, chapter 2, for more information.

Aliens. Resident and nonresident aliens may also have to pay estimated tax. Resident aliens should follow the rules in this chapter unless no-ted otherwise. Nonresident aliens should get Form 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals.

You are an alien if you aren’t a citizen or na-tional of the United States. You are a resident alien if you either have a green card or meet the substantial presence test. For more information about the substantial presence test, see Pub. 519, U.S. Tax Guide for Aliens.

Married taxpayers. If you qualify to make joint estimated tax payments, apply the rules dis-cussed here to your joint estimated income.

You and your spouse can make joint estima-ted tax payments even if you aren’t living to-gether.

However, you and your spouse can’t make joint estimated tax payments if:

You are legally separated under a decree of divorce or separate maintenance,

You and your spouse have different tax years, or

Either spouse is a nonresident alien (un-less that spouse elected to be treated as a resident alien for tax purposes (see chap-ter 1 of Pub. 519)).

If you and your spouse can’t make estima-ted tax payments, apply these rules to your sep-arate estimated income. Making joint or sepa-rate estimated tax payments won't affect your choice of filing a joint tax return or separate re-turns for 2021.

2020 separate returns and 2021 joint re-turn. If you plan to file a joint return with your spouse for 2021 but you filed separate returns for 2020, your 2020 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

2020 joint return and 2021 separate re-turns. If you plan to file a separate return for 2021 but you filed a joint return for 2020, your 2020 tax is your share of the tax on the joint re-turn. You file a separate return if you file as sin-gle, head of household, or married filing sepa-rately.

To figure your share of the tax on the joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2020 using the same filing status as for 2021. Then, multiply the tax on the joint re-turn by the following fraction.

Page 40Chapter 4Tax Withholding and Estimated Tax

The tax you would have paid had you filed a separate return

The total tax you and your spouse would have paid had you filed separate returns

Example. Joe and Heather filed a joint re-turn for 2020 showing taxable income of $48,500 and a tax of $5,428. Of the $48,500 taxable income, $40,100 was Joe's and the rest was Heather's. For 2021, they plan to file mar-ried filing separately. Joe figures his share of the tax on the 2020 joint return as follows.

Tax on $40,100 based on a	$4,618
separate return . . . . . . .
Tax on $8,400 based on a	843
separate return . . . . . . .
. . . . . . . . . . . . . . .Total	$5,461
Joe's percentage of total	85%
($4,618 ÷ $5,461) . . . . . .
Joe's share of tax on joint
return	$4,614
($5,428×85%) . . . . . . .

How To Figure

Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income (AGI), taxable income, taxes, deductions, and credits for the year.

When figuring your 2021 estimated tax, it may be helpful to use your income, deductions, and credits for 2020 as a starting point. Use your 2020 federal tax return as a guide. You can use Form 1040-ES and Pub. 505 to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) and Pub. 505 to figure esti-mated tax (see chapter 8 of Pub. 519 for more information).

You must make adjustments both for changes in your own situation and for recent changes in the tax law. For a discussion of these changes, visit IRS.gov.

For more complete information on how to figure your estimated tax for 2021, see chap-ter 2 of Pub. 505.

When To Pay Estimated Tax

For estimated tax purposes, the tax year is divi-ded into four payment periods. Each period has a specific payment due date. If you don't pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return. The payment periods and due dates for estimated tax payments are shown next.

For the period:	Due date:*
Jan. 1–March 31 .	. . . . . April 15
April 1–May 31 . .	. . . . . June 15
June 1–August 31	. . . . . Sept. 15
Sept. 1–Dec. 31 .	. . . . . Jan. 18, next year

*See Saturday, Sunday, holiday rule and January payment.

Saturday, Sunday, holiday rule. If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the pay-ment will be on time if you make it on the next day that isn't a Saturday, Sunday, or legal holi-day.

January payment. If you file your 2021 Form 1040 or 1040-SR by January 31, 2022, and pay the rest of the tax you owe, you don't need to make the payment due on January 18, 2022.

Fiscal year taxpayers. If your tax year doesn't start on January 1, see the Form 1040-ES in-structions for your payment due dates.

When To Start

You don't have to make estimated tax pay-ments until you have income on which you will owe income tax. If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period. You can pay all your estimated tax at that time, or you can pay it in installments. If you choose to pay in in-stallments, make your first payment by the due date for the first payment period. Make your re-maining installment payments by the due dates for the later periods.

No income subject to estimated tax during first period. If you don't have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. You can pay your entire es-timated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remain-ing periods.

Table 4-1. General Due Dates for
Estimated Tax
Installment Payments

If you first	Make	Make later
have income	installments	installments
on which you	by:*	by:*
must pay
estimated tax:
Before April 1	April 15	June 15
		Sept. 15
		Jan. 15, next
		year
April 1–May 31	June 15	Sept. 15
		Jan. 15, next
		year
June 1–Aug. 31	Sept. 15	Jan. 15, next
		year
After Aug. 31	Jan. 15, next	(None)
	year

*See Saturday, Sunday, holiday rule and January payment.

How much to pay to avoid a penalty. To de-termine how much you should pay by each pay-ment due date, see How To Figure Each Pay-ment next.

How To Figure

Each Payment

You should pay enough estimated tax by the due date of each payment period to avoid a penalty for that period. You can figure your re-quired payment for each period by using either the regular installment method or the annual-ized income installment method. These meth-ods are described in chapter 2 of Pub. 505. If you don't pay enough during each payment pe-riod, you may be charged a penalty even if you are due a refund when you file your tax return.

If the earlier discussion of No income sub-ject to estimated tax during first period or the later discussion of Change in estimated tax ap-plies to you, you may benefit from reading An-nualized Income Installment Method in chap-ter 2 of Pub. 505 for information on how to avoid a penalty.

Underpayment penalty. Under the regular in-stallment method, if your estimated tax payment for any period is less than one-fourth of your es-timated tax, you may be charged a penalty for underpayment of estimated tax for that period when you file your tax return. Under the annual-ized income installment method, your estimated tax payments vary with your income, but the amount required must be paid each period. See Instructions for Form 2210 for more information.

Change in estimated tax. After you make an estimated tax payment, changes in your in-come, adjustments, deductions, or credits may make it necessary for you to refigure your esti-mated tax. Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods.

Estimated Tax Payments Not Required

You don't have to pay estimated tax if your with-holding in each payment period is at least as much as:

One-fourth of your required annual pay-ment, or

Your required annualized income install-ment for that period.

You also don't have to pay estimated tax if you will pay enough through withholding to keep the amount you owe with your return under $1,000.

How To Pay Estimated Tax

There are several ways to pay estimated tax.

Credit an overpayment on your 2020 return to your 2021 estimated tax.

Pay by direct transfer from your bank ac-count, or pay by debit or credit card using a pay-by-phone system or the Internet.

Send in your payment (check or money or-der) with a payment voucher from Form 1040-ES.

Chapter 4Tax Withholding and Estimated TaxPage 41

Credit an Overpayment

If you show an overpayment of tax after com-pleting your Form 1040 or 1040-SR for 2020, you can apply part or all of it to your estimated tax for 2021. On line 36 of Form 1040 or 1040-SR, enter the amount you want credited to your estimated tax rather than refunded. Take the amount you have credited into ac-count when figuring your estimated tax pay-ments.

You can’t have any of the amount you credi-ted to your estimated tax refunded to you until you file your tax return for the following year. You also can’t use that overpayment in any other way.

Pay Online

The IRS offers an electronic payment option that is right for you. Paying online is convenient, secure, and helps make sure we get your pay-ments on time. To pay your taxes online or for more information, go to IRS.gov/Payments. You can pay using any of the following methods.

IRS Direct Pay. For online transfers di-rectly from your checking or savings ac-count at no cost to you, go to IRS.gov/ Payments.

Pay by Card. To pay by debit or credit card, go to IRS.gov/Payments. A conven-ience fee is charged by these service pro-viders.

Electronic Funds Withdrawal (EFW). This is an integrated e-file/e-pay option of-fered only when filing your federal taxes electronically using tax preparation soft-ware, through a tax professional, or the IRS at IRS.gov/Payments.

Online Payment Agreement. If you can’t pay in full by the due date of your tax re-turn, you can apply for an online monthly installment agreement at IRS.gov/ Payments. Once you complete the online process, you will receive immediate notifi-cation of whether your agreement has been approved. A user fee is charged.

IRS2GO. This is the mobile application of the IRS. You can access Direct Pay or Pay By Card by downloading the application.

Pay by Phone

Paying by phone is another safe and secure method of paying electronically. Use one of the following methods: (1) call one of the debit or credit card providers, or (2) use the Electronic Federal Tax Payment System (EFTPS).

Debit or credit card. Call one of our service providers. Each charges a fee that varies by provider, card type, and payment amount.

WorldPay US, Inc.

844-PAY-TAX-8TM (844-729-8298)

www.payUSAtax.com

Official Payments Corporation

888-UPAY-TAXTM (888-872-9829)

www.officialpayments.com

Link2Gov Corporation

888-PAY-1040TM (888-729-1040)

www.PAY1040.com

EFTPS. To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 800-555-4477 (English) or 800-244-4829 (Es-pañol). People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 800-733-4829. For more information about EFTPS, go to IRS.gov/Payments or www.EFTPS.gov.

Pay by Mobile Device

To pay through your mobile device, download the IRS2Go application.

Pay by Cash

Cash is an in-person payment option for individ-uals provided through retail partners with a maximum of $1,000 per day per transaction. To make a cash payment, you must first be regis-tered online at www.officialpayments.com, our Official Payment provider.

Pay by Check or Money Order Using the Estimated Tax Payment Voucher

Before submitting a payment through the mail using the estimated tax payment voucher, please consider alternative methods. One of our safe, quick, and easy electronic payment options might be right for you.

If you choose to mail in your payment, each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES.

During 2020, if you:

Made at least one estimated tax payment but not by electronic means,

Didn't use software or a paid preparer to prepare or file your return,

then you should receive a copy of the 2021 Form 1040-ES with payment vouchers.

The enclosed payment vouchers will be pre-printed with your name, address, and social se-curity number. Using the preprinted vouchers will speed processing, reduce the chance of er-ror, and help save processing costs.

Use the window envelopes that came with your Form 1040-ES package. If you use your own envelopes, make sure you mail your pay-ment vouchers to the address shown in the Form 1040-ES instructions for the place where you live.

No checks of $100 million or more accep-ted. The IRS can’t accept a single check (in-cluding a cashier’s check) for amounts of $100,000,000 ($100 million) or more. If you are sending $100 million or more by check, you’ll need to spread the payment over two or more checks with each check made out for an amount less than $100 million. This limit doesn’t apply to other methods of payment (such as electronic payments). Please consider a method of payment other than check if the amount of the payment is over $100 million.

Note. These criteria can change without no-tice. If you don't receive a Form 1040-ES pack-age and you are required to make an estimated tax payment, you should go to IRS.gov/ Form1040ES and print a copy of Form 1040-ES that includes four blank payment vouchers. Complete one of these and make your payment timely to avoid penalties for paying late.

Don't use the address shown in the In-

structions for Forms 1040 and CAUTION 1040-SR for your estimated tax pay-ments.

If you didn't pay estimated tax last year, you can order Form 1040-ES from the IRS (see the inside back cover of this publication) or down-load it from IRS.gov. Follow the instructions to make sure you use the vouchers correctly.

Joint estimated tax payments. If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return.

Change of address. You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form.

Credit for Withholding and Estimated Tax for 2020

When you file your 2020 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Also take credit for the estimated tax you paid for 2020. These credits are subtracted from your total tax. Because these credits are refundable, you should file a return and claim these credits, even if you don't owe tax.

Two or more employers. If you had two or more employers in 2020 and were paid wages of more than $137,700, too much social secur-ity or tier 1 railroad retirement tax may have been withheld from your pay. You may be able to claim the excess as a credit against your in-come tax when you file your return. See the In-structions for Forms 1040 and 1040-SR for more information.

Withholding

If you had income tax withheld during 2020, you should be sent a statement by January 31, 2021, showing your income and the tax with-held. Depending on the source of your income, you should receive:

Form W-2, Wage and Tax Statement;

Form W-2G, Certain Gambling Winnings; or

A form in the 1099 series.

Forms W-2 and W-2G. If you file a paper re-turn, always file Form W-2 with your income tax return. File Form W-2G with your return only if it

Page 42Chapter 4Tax Withholding and Estimated Tax

shows any federal income tax withheld from your winnings.

You should get at least two copies of each form. If you file a paper return, attach one copy to the front of your federal income tax return. Keep one copy for your records. You should also receive copies to file with your state and lo-cal returns.

Form W-2

Your employer is required to provide or send Form W-2 to you no later than January 31, 2021. You should receive a separate Form W-2 from each employer you worked for.

If you stopped working before the end of 2020, your employer could have given you your Form W-2 at any time after you stopped work-ing. However, your employer must provide or send it to you by January 31, 2021.

If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later.

If you haven't received your Form W-2 by January 31, you should ask your employer for it. If you don't receive it by early February, call the IRS.

Form W-2 shows your total pay and other compensation and the income tax, social secur-ity tax, and Medicare tax that was withheld dur-ing the year. Include the federal income tax withheld (as shown in box 2 of Form W-2) on Form 1040 or 1040-SR, line 25a.

In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay.

Form W-2G

If you had gambling winnings in 2020, the payer may have withheld income tax. If tax was with-held, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld.

Report the amounts you won on Schedule 1 (Form 1040). Take credit for the tax withheld on Form 1040 or 1040-SR, line 25c.

The 1099 Series

Most forms in the 1099 series aren’t filed with your return. These forms should be furnished to you by January 31, 2021 (or, for Forms 1099-B, 1099-S, and certain Forms 1099-MISC, by Feb-ruary 15, 2021). Unless instructed to file any of these forms with your return, keep them for your records. There are several different forms in this series, which are not listed. See the instructions for the specific Form 1099 for more information.

Form 1099-R. Attach Form 1099-R to your pa-per return if box 4 shows federal income tax withheld. Include the amount withheld in the to-tal on line 25b of Form 1040 or 1040-SR.

Backup withholding. If you were subject to backup withholding on income you received during 2020, include the amount withheld, as shown on your Form 1099, in the total on line 25b of Form 1040 or 1040-SR.

Form Not Correct

If you receive a form with incorrect information on it, you should ask the payer for a corrected form. Call the telephone number or write to the address given for the payer on the form. The corrected Form W-2G or Form 1099 you re-ceive will have an “X” in the “CORRECTED” box at the top of the form. A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2.

In certain situations, you will receive two forms in place of the original incorrect form. This will happen when your taxpayer identifica-tion number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV, Dividends and Distributions, instead of a Form 1099-INT, Interest Income). One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. This form will have an “X” in the “CORRECTED” box at the top of the form. The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box won't be checked).

Form Received After Filing

If you file your return and you later receive a form for income that you didn't include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040-X, Amended U.S. Individual Income Tax Return.

Separate Returns

If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Don't include any amount withheld from your spouse's income. However, different rules may apply if you live in a com-munity property state.

Community property states are listed in chapter 2. For more information on these rules, and some exceptions, see Pub. 555, Commun-ity Property.

Estimated Tax

Take credit for all your estimated tax payments for 2020 on Form 1040 or 1040-SR, line 26. In-clude any overpayment from 2019 that you had credited to your 2020 estimated tax.

Name changed. If you changed your name, and you made estimated tax payments using your old name, attach a brief statement to the front of your paper tax return indicating:

When you made the payments,

The amount of each payment,

Your name when you made the payments, and

Your social security number.

The statement should cover payments you made jointly with your spouse as well as any you made separately.

Be sure to report the change to the Social Security Administration. This prevents delays in processing your return and issuing any refunds.

Separate Returns

If you and your spouse made separate estima-ted tax payments for 2020 and you file separate returns, you can take credit only for your own payments.

If you made joint estimated tax payments, you must decide how to divide the payments between your returns. One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. If you can’t agree, you must divide the pay-ments in proportion to each spouse's individual tax as shown on your separate returns for 2020.

Divorced Taxpayers

If you made joint estimated tax payments for 2020, and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. If you can’t agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2020.

If you claim any of the joint payments on your tax return, enter your former spouse's so-cial security number (SSN) in the space provi-ded on the front of Form 1040 or 1040-SR. If you divorced and remarried in 2020, enter your present spouse's SSN in the space provided on the front of Form 1040 or 1040-SR. Also, on the dotted line next to line 26, enter your former spouse’s SSN, followed by “DIV.”

Underpayment Penalty for 2020

If you didn't pay enough tax, either through with-holding or by making timely estimated tax pay-ments, you will have an underpayment of esti-mated tax and you may have to pay a penalty.

Generally, you won't have to pay a penalty for 2020 if any of the following apply.

The total of your withholding and estimated tax payments was at least as much as your 2019 tax (or 110% of your 2019 tax if your AGI was more than $150,000, $75,000 if your 2020 filing status is married filing sep-arately) and you paid all required estima-ted tax payments on time;

The tax balance due on your 2020 return is no more than 10% of your total 2020 tax, and you paid all required estimated tax payments on time;

Your total 2020 tax minus your withholding and refundable credits is less than $1,000;

You didn't have a tax liability for 2019 and your 2019 tax year was 12 months; or

You didn't have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.

Extended due dates for 2020 estimated tax payments. The due date for filing estimated tax forms and paying estimated taxes has been postponed to July 15, 2020.

For more information, see Filing and Payment Deadlines Questions and Answers on IRS.gov.

Chapter 4Tax Withholding and Estimated TaxPage 43

Farmers and fishermen. Special rules apply if you are a farmer or fisherman. See the Instruc-tions for Form 2210-F for more information.

IRS can figure the penalty for you. If you think you owe the penalty but you don't want to

figure it yourself when you file your tax return, you may not have to. Generally, the IRS will fig-ure the penalty for you and send you a bill. However, if you think you are able to lower or eliminate your penalty, you must complete

Form 2210 or Form 2210-F and attach it to your paper return. See Instructions for Form 2210 for more information.

Page 44Chapter 4Tax Withholding and Estimated Tax

Part Two.

Income and Adjustments to Income

The five chapters in this part discuss many kinds of income and adjustments to income. They explain which income is and isn’t taxed and discuss some of the adjustments to income that you can make in figuring your adjusted gross income.

The Form 1040 and 1040-SR schedules that are discussed in these chapters are:

Schedule 1, Additional Income and Adjustments to Income;

Schedule 2 (Part II), Other Taxes; and

Schedule 3 (Part II), Other Payments and Refundable Credits.

Table V. Other Adjustments to Income

Use this table to find information about other adjustments to income not covered in this part of the publication.

IF you are looking for more information about the

THEN see...

deduction for...

contributions to a health savings account

Pub. 969, Health Savings Accounts and Other Tax-Favored

Health Plans.

moving expenses

Pub. 3, Armed Forces’ Tax Guide.

part of your self-employment tax

chapter 11.

self-employed health insurance

Pub. 502, Medical and Dental Expenses.

payments to self-employed SEP, SIMPLE, and qualified plans

Pub. 560, Retirement Plans for Small Business.

penalty on the early withdrawal of savings

chapter 6.

contributions to an Archer MSA

Pub. 969.

reforestation amortization or expense

chapters 7 and 8 of Pub. 535, Business Expenses.

contributions to Internal Revenue Code section 501(c)(18)(D)

Pub. 525, Taxable and Nontaxable Income.

pension plans

expenses from the rental of personal property

chapter 8.

certain required repayments of supplemental unemployment

chapter 8.

benefits (sub-pay)

foreign housing costs

chapter 4 of Pub. 54, Tax Guide for U.S. Citizens and Resident

Aliens Abroad

.

jury duty pay given to your employer

chapter 8.

contributions by certain ministers or chaplains to Internal

Pub. 517, Social Security and Other Information for Members of

Revenue Code section 403(b) plans

the Clergy and Religious Workers.

attorney fees and certain costs for actions involving IRS awards

Pub. 525.

to whistleblowers

Chapter 4Tax Withholding and Estimated TaxPage 45

5.

Wages, Salaries,

and Other Earnings

Reminders

Deferred compensation contribution limit increased. If you participate in a 401(k) plan, 403(b) plan, or the federal government's Thrift Savings Plan, the total annual amount you can contribute is increased to $19,500. This also applies to most 457 plans.

Introduction

This chapter discusses compensation received for services as an employee, such as wages, salaries, and fringe benefits. The following top-ics are included.

Bonuses and awards.

Special rules for certain employees.

Sickness and injury benefits.

The chapter explains what income is inclu-ded and isn’t included in the employee's gross income and what’s not included.

Useful Items

You may want to see:

Publication

463 Travel, Gift, and Car Expenses

502 Medical and Dental Expenses

524 Credit for the Elderly or the Disabled

525 Taxable and Nontaxable Income

526 Charitable Contributions

550 Investment Income and Expenses

554 Tax Guide for Seniors

575 Pension and Annuity Income

907 Tax Highlights for Persons With Disabilities

926 Household Employer's Tax Guide

3920 Tax Relief for Victims of Terrorist Attacks

For these and other useful items, go to IRS.gov/ Forms.

Employee Compensation

This section discusses various types of em-ployee compensation, including fringe benefits, retirement plan contributions, stock options, and restricted property.

Form W-2. If you’re an employee, you should receive a Form W-2 from your employer show-ing the pay you received for your services. In-clude your pay on line 1 of Form 1040 or 1040-SR, even if you don’t receive a Form W-2.

In some instances, your employer isn’t re-quired to give you a Form W-2. Your employer isn’t required to give you a Form W-2 if you per-form household work in your employer's home for less than $2,200 in cash wages during the calendar year and you have no federal income taxes withheld from your wages. Household work is work done in or around an employer's home. Some examples of workers who do household work are:

Babysitters,

Caretakers,

House cleaning workers,

Domestic workers,

Drivers,

Health aides,

Housekeepers,

Maids,

Nannies,

Private nurses, and

Yard workers.

See Schedule H (Form 1040), Household Employment Taxes, and its instructions, and Pub. 926 for more information.

If you performed services, other than as an independent contractor, and your employer didn’t withhold social security and Medicare taxes from your pay, you must file Form 8919, Uncollected Social Security and Medicare Tax on Wages, with your Form 1040 or 1040-SR. See Form 8919 and its instructions for more in-formation on how to figure unreported wages and taxes and how to include them on your in-come tax return.

Childcare providers. If you provide childcare, either in the child's home or in your home or other place of business, the pay you receive must be included in your income. If you aren’t an employee, you’re probably self-employed and must include payments for your services on Schedule C (Form 1040), Profit or Loss From Business. You generally aren’t an employee un-less you’re subject to the will and control of the person who employs you as to what you’re to do and how you’re to do it.

Babysitting. If you’re paid to babysit, even for relatives or neighborhood children, whether on a regular basis or only periodically, the rules for childcare providers apply to you.

Employment tax. Whether you're an em-ployee or self-employed person, your income could be subject to self-employment tax. See the instructions for Schedules C and SE (Form 1040) if you're self-employed. Also, see Pub. 926 for more information.

Miscellaneous

Compensation

This section discusses different types of em-ployee compensation.

Advance commissions and other earnings. If you receive advance commissions or other amounts for services to be performed in the fu-ture and you’re a cash-method taxpayer, you must include these amounts in your income in the year you receive them.

If you repay unearned commissions or other amounts in the same year you receive them, re-duce the amount included in your income by the repayment. If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), line 16, or you may be able to take a credit for that year. See Repayments in chapter 8.

Allowances and reimbursements. If you re-ceive travel, transportation, or other business expense allowances or reimbursements from your employer, see Pub. 463, Travel, Gift, and Car Expenses. If you’re reimbursed for moving expenses, see Pub. 521, Moving Expenses.

Back pay awards. If you receive an amount in payment of a settlement or judgment for back pay, you must include the amount of the pay-ment in your income. This includes payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premi-ums. They should be reported to you by your employer on Form W-2.

Bonuses and awards. If you receive a bonus or award (cash, goods, services) from your em-ployer, you must include its value in your in-come. However, if your employer merely prom-ises to pay you a bonus or award at some future time, it isn’t taxable until you receive it or it’s made available to you.

Employee achievement award. If you re-ceive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achieve-ment, you can generally exclude its value from your income. The amount you can exclude is limited to your employer's cost and can’t be more than $1,600 for qualified plan awards or $400 for nonqualified plan awards for all such awards you receive during the year. Your em-ployer can tell you whether your award is a qualified plan award. Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that don’t create a significant likelihood of it being dis-guised pay.

However, the exclusion doesn’t apply to the following awards.

A length-of-service award if you received it for less than 5 years of service or if you re-ceived another length-of-service award during the year or the previous 4 years.

A safety achievement award if you’re a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards dur-ing the year.

Example. Ben Green received three em-ployee achievement awards during the year: a nonqualified plan award of a watch valued at $250, two qualified plan awards of a stereo val-ued at $1,000, and a set of golf clubs valued at $500. Assuming that the requirements for quali-fied plan awards are otherwise satisfied, each

Page 46Chapter 5Wages, Salaries, and Other Earnings

award by itself would be excluded from income. However, because the $1,750 total value of the awards is more than $1,600, Ben must include $150 ($1,750 – $1,600) in his income.

Differential wage payments. This is any pay-ment made to you by an employer for any pe-riod during which you are, for a period of more than 30 days, an active duty member of the uni-formed services and represents all or a portion of the wages you would have received from the employer during that period. These payments are treated as wages and are subject to income tax withholding, but not FICA or FUTA taxes. The payments are reported as wages on Form W-2.

Government cost-of-living allowances. Most payments received by U.S. Government civilian employees for working abroad are taxa-ble. However, certain cost-of-living allowances are tax free. Pub. 516, U.S. Government Civil-ian Employees Stationed Abroad, explains the tax treatment of allowances, differentials, and other special pay you receive for employment abroad.

Nonqualified deferred compensation plans. Your employer may report to you the total amount of deferrals for the year under a non-qualified deferred compensation plan on Form W-2, box 12, using code Y. This amount isn’t in-cluded in your income.

However, if at any time during the tax year, the plan fails to meet certain requirements, or isn’t operated under those requirements, all amounts deferred under the plan for the tax year and all preceding tax years to the extent vested and not previously included in income are included in your income for the current year. This amount is included in your wages shown on Form W-2, box 1. It’s also shown on Form W-2, box 12, using code Z.

Note received for services. If your employer gives you a secured note as payment for your services, you must include the fair market value (usually the discount value) of the note in your income for the year you receive it. When you later receive payments on the note, a propor-tionate part of each payment is the recovery of the fair market value that you previously inclu-ded in your income. Don’t include that part again in your income. Include the rest of the payment in your income in the year of payment.

If your employer gives you a nonnegotiable unsecured note as payment for your services, payments on the note that are credited toward the principal amount of the note are compensa-tion income when you receive them.

Severance pay. If you receive a severance payment when your employment with your em-ployer ends or is terminated, you must include this amount in your income.

Accrued leave payment. If you’re a federal employee and receive a lump-sum payment for accrued annual leave when you retire or resign, this amount will be included as wages on your Form W-2.

If you resign from one agency and are reem-ployed by another agency, you may have to re-pay part of your lump-sum annual leave pay-ment to the second agency. You can reduce gross wages by the amount you repaid in the same tax year in which you received it. Attach

to your tax return a copy of the receipt or state-ment given to you by the agency you repaid to explain the difference between the wages on the return and the wages on your Forms W-2.

Outplacement services. If you choose to accept a reduced amount of severance pay so that you can receive outplacement services (such as training in résumé writing and inter-view techniques), you must include the unre-duced amount of the severance pay in income.

Sick pay. Pay you receive from your employer while you’re sick or injured is part of your salary or wages. In addition, you must include in your income sick pay benefits received from any of the following payers.

A welfare fund.

A state sickness or disability fund.

An association of employers or employees.

An insurance company, if your employer paid for the plan.

However, if you paid the premiums on an acci-dent or health insurance policy yourself, the benefits you receive under the policy aren’t tax-able. For more information, see Pub. 525, Taxa-ble and Nontaxable Income.

Social security and Medicare taxes paid by employer. If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. However, these payments aren’t treated as social security and Medicare wages if you’re a household worker or a farm worker.

Stock appreciation rights. Don’t include a stock appreciation right granted by your em-ployer in income until you exercise (use) the right. When you use the right, you’re entitled to a cash payment equal to the fair market value of the corporation's stock on the date of use minus the fair market value on the date the right was granted. You include the cash payment in your income in the year you use the right.

Fringe Benefits

Fringe benefits received in connection with the performance of your services are included in your income as compensation unless you pay fair market value for them or they’re specifically excluded by law. Refraining from the perform-ance of services (for example, under a cove-nant not to compete) is treated as the perform-ance of services for purposes of these rules.

Accounting period. You must use the same accounting period your employer uses to report your taxable noncash fringe benefits. Your em-ployer has the option to report taxable noncash fringe benefits by using either of the following rules.

The general rule: benefits are reported for a full calendar year (January 1–December 31).

The special accounting period rule: bene-fits provided during the last 2 months of the calendar year (or any shorter period) are treated as paid during the following calen-dar year. For example, each year your em-ployer reports the value of benefits provi-ded during the last 2 months of the prior year and the first 10 months of the current year.

Your employer doesn’t have to use the same accounting period for each fringe benefit, but must use the same period for all employees who receive a particular benefit.

You must use the same accounting period that you use to report the benefit to claim an employee business deduction (for use of a car, for example).

Form W-2. Your employer must include all tax-able fringe benefits in box 1 of Form W-2 as wa-ges, tips, and other compensation and, if appli-cable, in boxes 3 and 5 as social security and Medicare wages. Although not required, your employer may include the total value of fringe benefits in box 14 (or on a separate statement). However, if your employer provided you with a vehicle and included 100% of its annual lease value in your income, the employer must sepa-rately report this value to you in box 14 (or on a separate statement).

Accident or Health Plan

In most cases, the value of accident or health plan coverage provided to you by your em-ployer isn’t included in your income. Benefits you receive from the plan may be taxable, as explained later under Sickness and Injury Bene-fits.

For information on the items covered in this section, other than long-term care coverage, see Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Long-term care coverage. Contributions by your employer to provide coverage for long-term care services generally aren’t inclu-ded in your income. However, contributions made through a flexible spending or similar ar-rangement offered by your employer must be included in your income. This amount will be re-ported as wages in box 1 of your Form W-2.

Contributions you make to the plan are dis-cussed in Pub. 502, Medical and Dental Expen-ses.

Archer MSA contributions. Contributions by your employer to your Archer MSA generally aren’t included in your income. Their total will be reported in box 12 of Form W-2 with code R. You must report this amount on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. File the form with your return.

Health flexible spending arrangement (health FSA). If your employer provides a health FSA that qualifies as an accident or health plan, the amount of your salary reduc-tion, and reimbursements of your medical care expenses, in most cases, aren’t included in your income.

Note. Health FSAs are subject to a limit on salary reduction contributions for plan years be-ginning after 2012. For tax years beginning in

Chapter 5Wages, Salaries, and Other EarningsPage 47

2020, the dollar limitation (as indexed for infla-	Holiday gifts. If your employer gives you a tur-
tion) on voluntary employee salary reductions	key, ham, or other item of nominal value at
for contributions to health FSAs is $2,750.	Christmas or other holidays, don’t include the
Health reimbursement arrangement (HRA).	value of the gift in your income. However, if your
	employer gives you cash or a cash equivalent,
If your employer provides an HRA that qualifies
	you must include it in your income.
as an accident or health plan, coverage and re-
imbursements of your medical care expenses	Educational Assistance
generally aren’t included in your income.

a single employer or multiple employers. If two or more employers provide insurance coverage that totals more than $50,000, the amounts re-ported as wages on your Forms W-2 won’t be correct. You must figure how much to include in your income. Reduce the amount you figure by any amount reported with code C in box 12 of your Forms W-2, add the result to the wages re-ported in box 1, and report the total on your re-

Health savings account (HSA). If you’re an eligible individual, you and any other person, in-cluding your employer or a family member, can make contributions to your HSA. Contributions, other than employer contributions, are deducti-ble on your return whether or not you itemize deductions. Contributions made by your em-ployer aren’t included in your income. Distribu-tions from your HSA that are used to pay quali-fied medical expenses aren’t included in your income. Distributions not used for qualified medical expenses are included in your income. See Pub. 969 for the requirements of an HSA.

Contributions by a partnership to a bona fide partner's HSA aren’t contributions by an em-

You can exclude from your income up to $5,250 of qualified employer-provided educational as-sistance. For more information, see Pub. 970, Tax Benefits for Education.

Group-Term Life Insurance

In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) isn’t included in your income. However, you must in-clude in income the cost of employer-provided insurance that is more than the cost of $50,000 of coverage reduced by any amount you pay to-ward the purchase of the insurance.

turn.

Figuring the taxable cost. Use Worksheet 5-1 to figure the amount to include in your in-come.

Worksheet 5-1. Figuring the

Cost of Group-Term Life

Insurance To Include in

Income

Keep for Your Records

1. Enter the total amount of

your insurance coverage

from your

ployer. The contributions are treated as a distri-		For exceptions, see Entire cost excluded
bution of money and aren’t included in the part-
		and Entire cost taxed, later.
ner's gross income. Contributions by a		If	your employer	provided more than
partnership to a partner's HSA for services ren-		$50,000 of coverage, the amount included in
dered are treated as guaranteed payments that		your income is reported as part of your wages in
are includible in the partner's gross income. In		box 1 of your Form W-2. Also, it’s shown sepa-
both situations, the partner can deduct the con-		rately in box 12 with code C.
tribution made to the partner's HSA.		Group-term life insurance. This insurance is
Contributions by an S corporation to a 2%
		term life insurance protection (insurance for a
shareholder-employee's HSA for services ren-
		fixed period of time) that:
dered are treated as guaranteed payments and
are includible in the shareholder-employee's		• Provides a general death benefit,
gross income. The shareholder-employee can		• Is provided to a group of employees,
deduct	the contribution made to the share-	•	Is provided under a policy carried by the
holder-employee's HSA.
			employer, and
*Qualified HSA funding distribution.* You		•	Provides an amount of insurance to each
can make a one-time distribution from your indi-
vidual retirement account (IRA) to an HSA and			employee based on a formula that pre-
you generally won’t include any of the distribu-			vents individual selection.
tion in your income.		*Permanent benefits.* If your group-term life

Adoption Assistance		insurance policy includes permanent benefits,
		such as a paid-up or cash surrender value, you
You may be able to exclude from your income		must include in your income, as wages, the cost
		of the permanent benefits minus the amount
amounts paid or expenses incurred by your em-
		you pay for them. Your employer should be able
ployer for qualified adoption expenses in con-
		to tell you the amount to include in your income.
nection with your adoption of an eligible child.
See the Instructions for Form 8839, Qualified		*Accidental death benefits.* Insurance that
Adoption Expenses, for more information.
		provides accidental or other death benefits but
Adoption benefits are reported by your em-
		doesn’t provide general death benefits (travel
ployer in box 12 of Form W-2 with code T. They
		insurance, for example) isn’t group-term life in-
are also included as social security and Medi-
		surance.
care wages in boxes 3 and 5. However, they
aren’t included as wages in box 1. To determine		Former employer. If your former employer
the taxable and nontaxable amounts, you must		provided more than $50,000 of group-term life
complete Part III of Form 8839. File the form		insurance coverage during the year, the amount
with your return.		included in your income is reported as wages in
		box 1 of Form W-2. Also, it’s shown separately
De Minimis (Minimal) Benefits		in box 12 with code C. Box 12 will also show the
		amount of uncollected social security and Medi-
If your employer provides you with a product or		care taxes on the excess coverage, with codes
service and the cost of it is so small that it would		M and N. You must pay these taxes with your
be unreasonable for the employer to account		income tax return. Include them on Schedule 2
for it, you generally don’t include its value in		(Form 1040), line 8, and follow the instructions
your income. In most cases, don’t include in		there.
your income the value of discounts at company		Two or more employers. Your exclusion for
cafeterias, cab fares home when working over-
		employer-provided group-term life insurance
time, and company picnics.
		coverage can’t exceed the cost of $50,000 of
		coverage, whether the insurance is provided by
Page 48	Chapter 5 Wages, Salaries, and Other Earnings

employer(s) . . . . . . . . . . . .	1.
2. Limit on exclusion for
employer-provided
group-term life insurance	2.	*50,000*
coverage . . . . . . . . . . . . . .

3. Subtract line 2 from

line 1 . . . . . . . . . . . . . . . . . 3.

4. Divide line 3 by $1,000. Figure to the nearest

tenth . . . . . . . . . . . . . . . . . 4.

5. Go to Table 5-1. Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age

group . . . . . . . . . . . . . . . . 5.

6. Multiply line 4 by

line 5 . . . . . . . . . . . . . . . . . 6.

7. Enter the number of full months of coverage at this cost . . . . . . . . . . . . . . . . . . 7.

8. Multiply line 6 by

line 7 . . . . . . . . . . . . . . . . . 8.

9. Enter the premiums you paid per month . . . . . 9.

10. Enter the number of months you paid the

premiums . . . . . 10.

11. Multiply line 9 by

line 10 . . . . . . . . . . . . . . . . 11.

12. Subtract line 11 from line 8.

Include this amount in your income as

wages . . . . . . . . . . . . . . . 12.

Table 5-1. Cost of $1,000 of

Group-Term Life Insurance for 1 Month

Age		Cost
Under 25
.................		$ 0.05
25 through 29 . . . . . . . . . . . . . .		0.06
30 through 34 . . . . . . . . . . . . . .		0.08
35 through 39 . . . . . . . . . . . . . .		0.09
40 through 44 . . . . . . . . . . . . . .		0.10
45 through 49 . . . . . . . . . . . . . .		0.15
50 through 54 . . . . . . . . . . . . . .		0.23
55 through 59 . . . . . . . . . . . . . .		0.43
60 through 64 . . . . . . . . . . . . . .		0.66
65 through 69 . . . . . . . . . . . . . .		1.27
70 and above . . . . . . . . . . . . . .		2.06

Example. You are 51 years old and work for employers A and B. Both employers provide group-term life insurance coverage for you for the entire year. Your coverage is $35,000 with employer A and $45,000 with employer B. You pay premiums of $4.15 a month under the em-ployer B group plan. You figure the amount to include in your income as shown in Worksheet 5-1. Figuring the Cost of Group-Term Life Insur-ance To Include in Income—Illustrated next.

Worksheet 5-1. Figuring the

Cost of Group-Term Life Insurance To Include in Income—Illustrated Keep for Your Records

1.	Enter the total amount of
	your insurance coverage
	from your					1.	80,000
	employer(s) . . . . .		. . .	.	. . .
2.	Limit on exclusion for
	employer-provided
	group-term life insurance					2.	*50,000*
	coverage . . . . . . .		. . .	.	. . .
3.	Subtract line 2 from					3.	30,000
	line 1 . . . . . . . . . .		. . .	.	. . .
4.	Divide line 3 by $1,000.
	Figure to the nearest					4.	30.0
	tenth . . . . . . . . . .		. . .	.	. . .
5.	Go to Table 5-1. Using your
		day of the tax
	age on the last
	year, find your age group in
	the left column, and enter the
	cost from the column on the
	right for your age					5.	0.23
	group . . . . . . . . .		. . .	.	. . .
6.	Multiply line 4 by					6.	6.90
	line 5 . . . . . . . . . .		. . .	.	. . .
7.	Enter the number of full
	months of coverage at this					7.	12
	cost . . . . . . . . . . .		. . .	.	. . .
8.	Multiply line 6 by					8.	82.80
	line 7 . . . . . . . . . .		. . .	.	. . .
9.	Enter the
	premiums you paid		9.		4.15
	per month . . . . .
10.	Enter the number
	of months you paid
	the		10.		12
	premiums . . . . .
11.	Multiply line 9 by						49.80
						11.
	line 10 . . . . . . . . .		. . .	.	. . .
12.	Subtract line 11 from line 8.
	Include this amount in
	your income as					12.	33.00
	wages . . . . . . . .		. . .	.	. . .

Entire cost excluded. You aren’t taxed on the cost of group-term life insurance if any of the following circumstances apply.

1. You’re permanently and totally disabled and have ended your employment.

2. Your employer is the beneficiary of the policy for the entire period the insurance is in force during the tax year.

3. A charitable organization (defined in Pub. 526, Charitable Contributions) to which contributions are deductible is the only beneficiary of the policy for the entire pe-riod the insurance is in force during the tax year. (You aren’t entitled to a deduction for a charitable contribution for naming a charitable organization as the beneficiary of your policy.)

4. The plan existed on January 1, 1984, and:

a. You retired before January 2, 1984, and were covered by the plan when you retired, or

b. You reached age 55 before January 2, 1984, and were employed by the employer or its predecessor in 1983.

Entire cost taxed. You’re taxed on the entire cost of group-term life insurance if either of the following circumstances apply.

The insurance is provided by your em-ployer through a qualified employees' trust, such as a pension trust or a qualified annu-ity plan.

You're a key employee and your employ-er's plan discriminates in favor of key em-ployees.

Retirement Planning Services

Generally, don’t include the value of qualified retirement planning services provided to you and your spouse by your employer's qualified retirement plan. Qualified services include re-tirement planning advice, information about your employer's retirement plan, and informa-tion about how the plan may fit into your overall individual retirement income plan. You can’t ex-clude the value of any tax preparation, account-ing, legal, or brokerage services provided by your employer.

Transportation

If your employer provides you with a qualified transportation fringe benefit, it can be excluded from your income, up to certain limits. A quali-fied transportation fringe benefit is:

Transportation in a commuter highway ve-hicle (such as a van) between your home and work place,

A transit pass, or

Qualified parking.

Cash reimbursement by your employer for these expenses under a bona fide reimburse-ment arrangement is also excludable. However, cash reimbursement for a transit pass is exclud-able only if a voucher or similar item that can be exchanged only for a transit pass isn’t readily available for direct distribution to you.

Exclusion limit. The exclusion for commuter vehicle transportation and transit pass fringe benefits can’t be more than $270 a month.

The exclusion for the qualified parking fringe benefit can’t be more than $270 a month.

If the benefits have a value that is more than these limits, the excess must be included in your income.

Commuter highway vehicle. This is a high-way vehicle that seats at least six adults (not in-cluding the driver). At least 80% of the vehicle's mileage must reasonably be expected to be:

For transporting employees between their homes and workplace, and

On trips during which employees occupy at least half of the vehicle's adult seating ca-pacity (not including the driver).

Transit pass. This is any pass, token, fare-card, voucher, or similar item entitling a person to ride mass transit (whether public or private) free or at a reduced rate or to ride in a com-muter highway vehicle operated by a person in the business of transporting persons for com-pensation.

Qualified parking. This is parking provided to an employee at or near the employer's place of business. It also includes parking provided on or near a location from which the employee commutes to work by mass transit, in a com-muter highway vehicle, or by carpool. It doesn’t include parking at or near the employee's home.

Retirement Plan Contributions

Your employer's contributions to a qualified re-tirement plan for you aren’t included in income at the time contributed. (Your employer can tell you whether your retirement plan is qualified.) However, the cost of life insurance coverage in-cluded in the plan may have to be included. See Group-Term Life Insurance, earlier, under Fringe Benefits.

If your employer pays into a nonqualified plan for you, you must generally include the contributions in your income as wages for the tax year in which the contributions are made. However, if your interest in the plan isn’t trans-ferable or is subject to a substantial risk of for-feiture (you have a good chance of losing it) at the time of the contribution, you don’t have to in-clude the value of your interest in your income until it’s transferable or is no longer subject to a substantial risk of forfeiture.

For information on distributions from TIP retirement plans, see Pub. 575, Pen-sion and Annuity Income (or Pub. 721, Tax Guide to U.S. Civil Service Retirement Ben-

efits, if you’re a federal employee or retiree).

Elective deferrals. If you’re covered by certain kinds of retirement plans, you can choose to have part of your compensation contributed by your employer to a retirement fund, rather than have it paid to you. The amount you set aside (called an elective deferral) is treated as an em-ployer contribution to a qualified plan. An elec-tive deferral, other than a designated Roth

Chapter 5Wages, Salaries, and Other EarningsPage 49

contribution (discussed later), isn’t included in wages subject to income tax at the time contrib-uted. Rather, it’s subject to income tax when distributed from the plan. However, it’s included in wages subject to social security and Medi-care taxes at the time contributed.

Elective deferrals include elective contribu-tions to the following retirement plans.

1. Cash or deferred arrangements (section 401(k) plans).

2. The Thrift Savings Plan for federal em-ployees.

3. Salary reduction simplified employee pen-sion plans (SARSEP).

4. Savings incentive match plans for employ-ees (SIMPLE plans).

5. Tax-sheltered annuity plans (section 403(b) plans).

6. Section 501(c)(18)(D) plans.

7. Section 457 plans.

Qualified automatic contribution arrange-ments. Under a qualified automatic contribu-tion arrangement, your employer can treat you as having elected to have a part of your com-pensation contributed to a section 401(k) plan. You are to receive written notice of your rights and obligations under the qualified automatic contribution arrangement. The notice must ex-plain:

Your rights to elect not to have elective contributions made, or to have contribu-tions made at a different percentage; and

How contributions made will be invested in the absence of any investment decision by you.

You must be given a reasonable period of time after receipt of the notice and before the first elective contribution is made to make an election with respect to the contributions.

Overall limit on deferrals. For 2020, in most cases, you shouldn’t have deferred more than a total of $19,500 of contributions to the plans listed in (1) through (3) and (5) above. The limit for SIMPLE plans is $13,500. The limit for section 501(c)(18)(D) plans is the lesser of $7,000 or 25% of your compensation. The limit for section 457 plans is the lesser of your in-cludible compensation or $19,500. Amounts deferred under specific plan limits are part of the overall limit on deferrals.

Designated Roth contributions. Employ-ers with section 401(k) and section 403(b) plans can create qualified Roth contribution programs so that you may elect to have part or all of your elective deferrals to the plan designa-ted as after-tax Roth contributions. Designated Roth contributions are treated as elective defer-rals, except that they’re included in income at the time contributed.

Excess deferrals. Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions. How-ever, you’re responsible for monitoring the total you defer to ensure that the deferrals aren’t more than the overall limit.

If you set aside more than the limit, the ex-cess must generally be included in your income

for that year, unless you have an excess defer-ral of a designated Roth contribution. See Pub. 525 for a discussion of the tax treatment of ex-cess deferrals.

Catch-up contributions. You may be al-lowed catch-up contributions (additional elec-tive deferral) if you’re age 50 or older by the end of the tax year.

Stock Options

If you receive a nonstatutory option to buy or sell stock or other property as payment for your services, you will usually have income when you receive the option, when you exercise the option (use it to buy or sell the stock or other property), or when you sell or otherwise dispose of the option. However, if your option is a statu-tory stock option, you won’t have any income until you sell or exchange your stock. Your em-ployer can tell you which kind of option you hold. For more information, see Pub. 525.

Restricted Property

In most cases, if you receive property for your services, you must include its fair market value in your income in the year you receive the prop-erty. However, if you receive stock or other property that has certain restrictions that affect its value, you don’t include the value of the property in your income until it has substantially vested. (Although you can elect to include the value of the property in your income in the year it’s transferred to you.) For more information, see Restricted Property in Pub. 525.

Dividends received on restricted stock. Dividends you receive on restricted stock are treated as compensation and not as dividend income. Your employer should include these payments on your Form W-2.

Stock you elected to include in income. Dividends you receive on restricted stock you elected to include in your income in the year transferred are treated the same as any other dividends. Report them on your return as divi-dends. For a discussion of dividends, see Pub. 550, Investment Income and Expenses.

For information on how to treat dividends re-ported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Pub. 525.

Special Rules for Certain Employees

This section deals with special rules for people in certain types of employment: members of the clergy, members of religious orders, people working for foreign employers, military person-nel, and volunteers.

Clergy

Generally, if you’re a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc., in addition to your salary. If the of-fering is made to the religious institution, it isn’t taxable to you.

If you’re a member of a religious organiza-tion and you give your outside earnings to the religious organization, you must still include the earnings in your income. However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. See Pub. 526.

Pension. A pension or retirement pay for a member of the clergy is usually treated as any other pension or annuity. It must be reported on lines 5a and 5b of Form 1040 or 1040-SR.

Housing. Special rules for housing apply to members of the clergy. Under these rules, you don’t include in your income the rental value of a home (including utilities) or a designated housing allowance provided to you as part of your pay. However, the exclusion can’t be more than the reasonable pay for your services. If you pay for the utilities, you can exclude any allow-ance designated for utility cost, up to your ac-tual cost. The home or allowance must be provi-ded as compensation for your services as an ordained, licensed, or commissioned minister. However, you must include the rental value of the home or the housing allowance as earnings from self-employment on Schedule SE (Form 1040) if you’re subject to the self-employment tax. For more information, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

Members of Religious Orders

If you’re a member of a religious order who has taken a vow of poverty, how you treat earnings that you renounce and turn over to the order de-pends on whether your services are performed for the order.

Services performed for the order. If you’re performing the services as an agent of the order in the exercise of duties required by the order, don’t include in your income the amounts turned over to the order.

If your order directs you to perform services for another agency of the supervising church or an associated institution, you’re considered to be performing the services as an agent of the order. Any wages you earn as an agent of an order that you turn over to the order aren’t inclu-ded in your income.

Example. You’re a member of a church or-der and have taken a vow of poverty. You re-nounce any claims to your earnings and turn over to the order any salaries or wages you earn. You’re a registered nurse, so your order assigns you to work in a hospital that is an as-sociated institution of the church. However, you remain under the general direction and control of the order. You’re considered to be an agent of the order and any wages you earn at the hos-pital that you turn over to your order aren’t inclu-ded in your income.

Services performed outside the order. If you’re directed to work outside the order, your services aren’t an exercise of duties required by the order unless they meet both of the following requirements.

They’re the kind of services that are ordi-narily the duties of members of the order.

Page 50Chapter 5Wages, Salaries, and Other Earnings

They’re part of the duties that you must ex-ercise for, or on behalf of, the religious or-der as its agent.

If you’re an employee of a third party, the serv-ices you perform for the third party won’t be considered directed or required of you by the order. Amounts you receive for these services are included in your income, even if you have taken a vow of poverty.

Example. Mark Brown is a member of a re-ligious order and has taken a vow of poverty. He renounces all claims to his earnings and turns over his earnings to the order.

Mark is a schoolteacher. He was instructed by the superiors of the order to get a job with a private tax-exempt school. Mark became an employee of the school, and, at his request, the school made the salary payments directly to the order.

Because Mark is an employee of the school, he is performing services for the school rather than as an agent of the order. The wages Mark earns working for the school are included in his income.

Foreign Employer

Special rules apply if you work for a foreign em-ployer.

U.S. citizen. If you’re a U.S. citizen who works in the United States for a foreign government, an international organization, a foreign em-bassy, or any foreign employer, you must in-clude your salary in your income.

Social security and Medicare taxes. You’re exempt from social security and Medi-care employee taxes if you’re employed in the United States by an international organization or a foreign government. However, you must pay self-employment tax on your earnings from services performed in the United States, even though you aren’t self-employed. This rule also applies if you’re an employee of a qualifying wholly owned instrumentality of a foreign gov-ernment.

Employees of international organizations or foreign governments. Your compensation for official services to an international organization is exempt from federal income tax if you aren’t a citizen of the United States or you’re a citizen of the Philippines (whether or not you’re a citizen of the United States).

Your compensation for official services to a foreign government is exempt from federal in-come tax if all of the following are true.

You aren’t a citizen of the United States or you’re a citizen of the Philippines (whether or not you’re a citizen of the United States).

Your work is like the work done by employ-ees of the United States in foreign coun-tries.

The foreign government gives an equal ex-emption to employees of the United States in its country.

Waiver of alien status. If you’re an alien who works for a foreign government or interna-tional organization and you file a waiver under section 247(b) of the Immigration and National-ity Act to keep your immigrant status, different

rules may apply. See Foreign Employer in Pub.

525.

Employment abroad. For information on the tax treatment of income earned abroad, see Pub. 54.

Military

Payments you receive as a member of a military service are generally taxed as wages except for retirement pay, which is taxed as a pension. Al-lowances generally aren’t taxed. For more infor-mation on the tax treatment of military allowan-ces and benefits, see Pub. 3, Armed Forces' Tax Guide.

Differential wage payments. Any payments made to you by an employer during the time you’re performing service in the uniformed serv-ices are treated as compensation. These wages are subject to income tax withholding and are reported on a Form W-2. See the discussion under Miscellaneous Compensation, earlier.

Military retirement pay. If your retirement pay is based on age or length of service, it’s taxable and must be included in your income as a pen-sion on lines 5a and 5b of Form 1040 or 1040-SR. Don’t include in your income the amount of any reduction in retirement or re-tainer pay to provide a survivor annuity for your spouse or children under the Retired Service-man's Family Protection Plan or the Survivor Benefit Plan.

For more detailed discussion of survivor an-nuities, see Pub. 575, Pension and Annuity In-come.

Disability. If you’re retired on disability, see Military and Government Disability Pensions under Sickness and Injury Benefits, later.

Veterans' benefits. Don’t include in your in-come any veterans' benefits paid under any law, regulation, or administrative practice ad-ministered by the Department of Veterans Af-fairs (VA). The following amounts paid to veter-ans or their families aren’t taxable.

Education, training, and subsistence allow-ances.

Disability compensation and pension pay-ments for disabilities paid either to veter-ans or their families.

Grants for homes designed for wheelchair living.

Grants for motor vehicles for veterans who lost their sight or the use of their limbs.

Veterans' insurance proceeds and divi-dends paid either to veterans or their bene-ficiaries, including the proceeds of a veter-an's endowment policy paid before death.

Interest on insurance dividends you leave on deposit with the VA.

Benefits under a dependent-care assis-tance program.

The death gratuity paid to a survivor of a member of the Armed Forces who died af-ter September 10, 2001.

Payments made under the compensated work therapy program.

Any bonus payment by a state or political subdivision because of service in a combat zone.

Volunteers

The tax treatment of amounts you receive as a volunteer worker for the Peace Corps or similar agency is covered in the following discussions.

Peace Corps. Living allowances you receive as a Peace Corps volunteer or volunteer leader for housing, utilities, household supplies, food, and clothing are generally exempt from tax.

Taxable allowances. The following allow-ances, however, must be included in your in-come and reported as wages.

Allowances paid to your spouse and minor children while you’re a volunteer leader training in the United States.

Living allowances designated by the Direc-tor of the Peace Corps as basic compen-sation. These are allowances for personal items such as domestic help, laundry and clothing maintenance, entertainment and recreation, transportation, and other mis-cellaneous expenses.

Leave allowances.

Readjustment allowances or termination payments. These are considered received by you when credited to your account.

Example. Gary Carpenter, a Peace Corps volunteer, gets $175 a month as a readjustment allowance during his period of service, to be paid to him in a lump sum at the end of his tour of duty. Although the allowance isn’t available to him until the end of his service, Gary must in-clude it in his income on a monthly basis as it’s credited to his account.

Volunteers in Service to America (VISTA). If you’re a VISTA volunteer, you must include meal and lodging allowances paid to you in your income as wages.

National Senior Services Corps programs. Don’t include in your income amounts you re-ceive for supportive services or reimburse-ments for out-of-pocket expenses from the fol-lowing programs.

Retired Senior Volunteer Program (RSVP).

Foster Grandparent Program.

Senior Companion Program.

Service Corps of Retired Executives (SCORE). If you receive amounts for suppor-tive services or reimbursements for out-of-pocket expenses from SCORE, don’t in-clude these amounts in gross income.

Volunteer tax counseling. Don’t include in your income any reimbursements you receive for transportation, meals, and other expenses you have in training for, or actually providing, volunteer federal income tax counseling for the elderly (TCE).

You can deduct as a charitable contribution your unreimbursed out-of-pocket expenses in taking part in the volunteer income tax assis-tance (VITA) program. See Pub. 526.

Chapter 5Wages, Salaries, and Other EarningsPage 51

Sickness and Injury Benefits

This section discusses sickness and injury ben-efits, including disability pensions, long-term care insurance contracts, workers' compensa-tion, and other benefits.

In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan that is paid for by your employer. If both you and your employer pay for the plan, only the amount you receive that is due to your employer's pay-ments is reported as income. However, certain payments may not be taxable to you. For infor-mation on nontaxable payments, see Military and Government Disability Pensions and Other Sickness and Injury Benefits, later in this dis-cussion.

Don’t report as income any amounts TIP paid to reimburse you for medical ex-penses you incurred after the plan was

established.

Cost paid by you. If you pay the entire cost of a health or accident insurance plan, don’t in-clude any amounts you receive from the plan for personal injury or sickness as income on your tax return. If your plan reimbursed you for medical expenses you deducted in an earlier year, you may have to include some, or all, of the reimbursement in your income. See What If You Receive Insurance Reimbursement in a Later Year? in Pub. 502, Medical and Dental Expenses.

Cafeteria plans. In most cases, if you’re cov-ered by an accident or health insurance plan through a cafeteria plan, and the amount of the insurance premiums wasn’t included in your in-come, you aren’t considered to have paid the premiums and you must include any benefits you receive in your income. If the amount of the premiums was included in your income, you’re considered to have paid the premiums, and any benefits you receive aren’t taxable.

Disability Pensions

If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on line 1 of Form 1040 or 1040-SR until you reach minimum retirement age. Minimum retirement age is generally the age at which you can first receive a pension or annuity if you’re not disabled.

You may be entitled to a tax credit if TIP you were permanently and totally disa-bled when you retired. For information on this credit and the definition of permanent

and total disability, see Pub. 524, Credit for the Elderly or the Disabled.

Beginning on the day after you reach mini-mum retirement age, payments you receive are taxable as a pension or annuity. Report the pay-ments on lines 5a and 5b of Form 1040 or 1040-SR. The rules for reporting pensions are explained in Disability Pensions in Pub 575.

For information on disability payments from a governmental program provided as a substi-tute for unemployment compensation, see Un-employment Benefits in chapter 8.

Retirement and profit-sharing plans. If you receive payments from a retirement or profit-sharing plan that doesn’t provide for disa-bility retirement, don’t treat the payments as a disability pension. The payments must be re-ported as a pension or annuity. For more infor-mation on pensions, see Pub 575.

Accrued leave payment. If you retire on disa-bility, any lump -sum payment you receive for accrued annual leave is a salary payment. The payment is not a disability payment. Include it in your income in the tax year you receive it.

Military and Government Disability Pensions

Certain military and government disability pen-sions aren’t taxable.

Service-connected disability. You may be able to exclude from income amounts you re-ceive as a pension, annuity, or similar allow-ance for personal injury or sickness resulting from active service in one of the following gov-ernment services.

The armed forces of any country.

The National Oceanic and Atmospheric Administration.

The Public Health Service.

The Foreign Service.

Conditions for exclusion. Don’t include the disability payments in your income if any of the following conditions apply.

1. You were entitled to receive a disability payment before September 25, 1975.

2. You were a member of a listed govern-ment service or its reserve component, or were under a binding written commitment to become a member, on September 24, 1975.

3. You receive the disability payments for a combat-related injury. This is a personal injury or sickness that:

a. Results directly from armed conflict;

b. Takes place while you’re engaged in extra-hazardous service;

c. Takes place under conditions simulat-ing war, including training exercises such as maneuvers; or

d. Is caused by an instrumentality of war.

4. You would be entitled to receive disability compensation from the Department of Vet-erans Affairs (VA) if you filed an applica-tion for it. Your exclusion under this condi-tion is equal to the amount you would be entitled to receive from the VA.

Pension based on years of service. If you receive a disability pension based on years of service, in most cases you must include it in your income. However, if the pension qualifies for the exclusion for a service-connected disa-bility (discussed earlier), don’t include in income the part of your pension that you would have re-

ceived if the pension had been based on a per-centage of disability. You must include the rest of your pension in your income.

Retroactive VA determination. If you retire from the armed services based on years of service and are later given a retroactive serv-ice-connected disability rating by the VA, your retirement pay for the retroactive period is ex-cluded from income up to the amount of VA dis-ability benefits you would have been entitled to receive. You can claim a refund of any tax paid on the excludable amount (subject to the stat-ute of limitations) by filing an amended return on Form 1040-X for each previous year during the retroactive period. You must include with each Form 1040-X a copy of the official VA De-termination letter granting the retroactive bene-fit. The letter must show the amount withheld and the effective date of the benefit.

If you receive a lump-sum disability sever-ance payment and are later awarded VA disa-bility benefits, exclude 100% of the severance benefit from your income. However, you must include in your income any lump-sum readjust-ment or other nondisability severance payment you received on release from active duty, even if you’re later given a retroactive disability rating by the VA.

Special period of limitation. In most ca-ses, under the period of limitation, a claim for credit or refund must be filed within 3 years from the time a return was filed or 2 years from the time the tax was paid. However, if you re-ceive a retroactive service-connected disability rating determination, the period of limitation is extended by a 1-year period beginning on the date of the determination. This 1-year extended period applies to claims for credit or refund filed after June 17, 2008, and doesn’t apply to any tax year that began more than 5 years before the date of the determination.

Terrorist attack or military action. Don’t in-clude in your income disability payments you receive for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States or from military action. See Pub. 3920 and Pub. 907 for more information.

Long-Term Care Insurance Contracts

Long-term care insurance contracts in most ca-ses are treated as accident and health insur-ance contracts. Amounts you receive from them (other than policyholder dividends or premium refunds) in most cases are excludable from in-come as amounts received for personal injury or sickness. To claim an exclusion for payments made on a per diem or other periodic basis un-der a long-term care insurance contract, you must file Form 8853 with your return.

A long-term care insurance contract is an in-surance contract that only provides coverage for qualified long-term care services. The con-tract must:

Be guaranteed renewable;

Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed;

Page 52Chapter 5Wages, Salaries, and Other Earnings

Provide that refunds, other than refunds on the death of the insured or complete sur-render or cancellation of the contract, and dividends under the contract, may only be used to reduce future premiums or in-crease future benefits; and

In most cases, not pay or reimburse ex-penses incurred for services or items that would be reimbursed under Medicare, ex-cept where Medicare is a secondary payer or the contract makes per diem or other periodic payments without regard to ex-penses.

Qualified long-term care services. Qualified long-term care services are:

Necessary diagnostic, preventive, thera-peutic, curing, treating, mitigating, and re-habilitative services, and maintenance and personal care services; and

Required by a chronically ill individual and provided pursuant to a plan of care prescri-bed by a licensed health care practitioner.

Chronically ill individual. A chronically ill indi-vidual is one who has been certified by a li-censed health care practitioner within the previ-ous 12 months as one of the following.

An individual who, for at least 90 days, is unable to perform at least two activities of daily living without substantial assistance due to loss of functional capacity. Activities of daily living are eating, toileting, transfer-ring, bathing, dressing, and continence.

An individual who requires substantial su-pervision to be protected from threats to health and safety due to severe cognitive impairment.

Limit on exclusion. You can generally ex-clude from gross income up to $380 a day for 2020. See Limit on exclusion, under Long-Term Care Insurance Contracts, under Other Sick-ness and Injury Benefits in Pub. 525 for more in-formation.

Workers' Compensation

Amounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they’re paid under a workers' compensation act or a statute in the nature of a workers' compensation act. The exemption also applies to your survivors. The exemption, how-ever, doesn’t apply to retirement plan benefits you receive based on your age, length of serv-ice, or prior contributions to the plan, even if you retired because of an occupational sickness or injury.

If part of your workers' compensation

reduces your social security or equiva-CAUTION lent railroad retirement benefits re-ceived, that part is considered social security (or equivalent railroad retirement) benefits and may be taxable. For more information, see Pub. 915, Social Security and Equivalent Railroad Retirement Benefits.

Return to work. If you return to work after qualifying for workers' compensation, salary payments you receive for performing light du-ties are taxable as wages.

Other Sickness and Injury Benefits

In addition to disability pensions and annuities, you may receive other payments for sickness or injury.

Railroad sick pay. Payments you receive as sick pay under the Railroad Unemployment In-surance Act are taxable and you must include them in your income. However, don’t include them in your income if they’re for an on-the-job injury.

If you received income because of a disabil-ity, see Disability Pensions, earlier.

Federal Employees' Compensation Act (FECA). Payments received under this Act for personal injury or sickness, including payments to beneficiaries in case of death, aren’t taxable. However, you’re taxed on amounts you receive under this Act as continuation of pay for up to 45 days while a claim is being decided. Report this income as wages. Also, pay for sick leave while a claim is being processed is taxable and must be included in your income as wages.

If part of the payments you receive un-

der FECA reduces your social security CAUTION or equivalent railroad retirement bene-fits received, that part is considered social se-curity (or equivalent railroad retirement) benefits and may be taxable. See Pub. 554 for more in-formation.

Other compensation. Many other amounts you receive as compensation for sickness or in-jury aren’t taxable. These include the following amounts.

Compensatory damages you receive for physical injury or physical sickness, whether paid in a lump sum or in periodic payments.

Benefits you receive under an accident or health insurance policy on which either you paid the premiums or your employer paid the premiums but you had to include them in your income.

Disability benefits you receive for loss of income or earning capacity as a result of injuries under a no-fault car insurance pol-icy.

Compensation you receive for permanent loss or loss of use of a part or function of your body, or for your permanent disfigure-ment. This compensation must be based only on the injury and not on the period of your absence from work. These benefits aren’t taxable even if your employer pays for the accident and health plan that pro-vides these benefits.

Reimbursement for medical care. A reim-bursement for medical care is generally not tax-able. However, it may reduce your medical ex-pense deduction. For more information, see Pub. 502.

6.

Interest Income

What’s New

Change in tax rates. Recent legislation modi-fied the tax rates and brackets used to figure the tax on 2020 unearned income for certain children. See the Instructions for Form 8615 or Pub. 929 for more information.

Reminder

Foreign-source income. If you are a U.S. citi-zen with interest income from sources outside the United States (foreign income), you must re-port that income on your tax return unless it is exempt by U.S. law. This is true whether you re-side inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer.

Automatic 6-month extension. If you receive your Form 1099 reporting your interest income late and you need more time to file your tax re-turn, you can request a 6-month extension of time to file. See Automatic Extension in chap-ter 1.

Introduction

This chapter discusses the following topics.

Different types of interest income.

What interest is taxable and what interest is nontaxable.

When to report interest income.

How to report interest income on your tax return.

In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. Exceptions to this rule are discussed later in this chapter.

You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. See Money borrowed to invest in certificate of de-posit, later, and chapter 12.

Useful Items

You may want to see:

Publication

537 Installment Sales

550 Investment Income and Expenses

1212 Guide to Original Issue Discount

(OID) Instruments

Form (and Instructions)

Schedule A (Form 1040) Itemized

Deductions

Chapter 6Interest IncomePage 53

Schedule B (Form 1040) Interest and Ordinary Dividends

8615 Tax for Certain Children Who Have Unearned Income

8814 Parents' Election To Report Child's Interest and Dividends

8815 Exclusion of Interest From Series

AE. and I U.S. Savings Bonds Issued After 1989

8818 Optional Form To Record Redemption of Series EE and I U.S. Savings Bonds Issued After 1989

For these and other useful items, go to IRS.gov/ Forms.

General Information

A few items of general interest are covered here.

Recordkeeping. You should keep a

list showing sources of interest income RECORDS and interest amounts received during the year. Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your re-cords.

Tax on unearned income of certain chil-dren. Part of a child's 2020 unearned income may be taxed at the parent's tax rate. If so, Form 8615 must be completed and attached to the child's tax return. If not, Form 8615 isn't re-quired and the child's income is taxed at his or her own tax rate.

Some parents can choose to include the child's interest and dividends on the parent's re-turn. If you can, use Form 8814 for this purpose.

For more information about the tax on un-earned income of children and the parents' election, go to Form 8615.

Beneficiary of an estate or trust. Interest you receive as a beneficiary of an estate or trust is generally taxable income. You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., from the fiduciary. Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040 or 1040-SR.

Taxpayer Identification Number (TIN). You must give your name and TIN (either a social security number (SSN), an employer identifica-tion number (EIN), or an individual tax identifi-cation number (ITIN)) to any person required by federal tax law to make a return, statement, or other document that relates to you. This in-cludes payers of interest. If you don't give your TIN to the payer of interest, you may have to pay a penalty or be subject to backup withhold-ing.

TIN for joint account. If the funds in a joint account belong to one person, list that person's name first on the account and give that person's TIN to the payer. (For information on who owns the funds in a joint account, see Joint accounts, later.) If the joint account contains combined funds, give the TIN of the person whose name is listed first on the account. This is because

Page 54Chapter 6Interest Income

only one name and SSN can be shown on Form 1099.

These rules apply to both joint ownership by a married couple and to joint ownership by other individuals. For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's TIN.

Custodian account for your child. If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's TIN to the payer. For ex-ample, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian.

Penalty for failure to supply TIN. If you don't give your TIN to the payer of interest, you may have to pay a penalty. See Failure to sup-ply SSN under Penalties in chapter 1. Backup withholding may also apply.

Backup withholding. Your interest income is generally not subject to regular withholding. However, it may be subject to backup withhold-ing to ensure that income tax is collected on the income. Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, by applying the appropri-ate withholding rate.

Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. For more in-formation, see Backup Withholding in chap-ter 4.

Reporting backup withholding. If backup withholding is deducted from your interest in-come, the payer must give you a Form 1099-INT for the year indicating the amount withheld. The Form 1099-INT will show any backup withholding as “Federal income tax withheld.”

Joint accounts. If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or ten-ants in common, each person's share of any in-terest from the property is determined by local law.

Income from property given to a child. Property you give as a parent to your child un-der the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property.

Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation.

Savings account with parent as trustee. Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the fol-lowing are true.

The savings account legally belongs to the child.

The parents aren't legally permitted to use any of the funds to support the child.

Form 1099-INT. Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. This form shows you the interest income you received during the year. Keep this form for your records. You don't have to attach it to your tax return.

Report on your tax return the total interest income you receive for the tax year. See the in-structions for Form 1099-INT to see whether you need to adjust any of the amounts reported to you.

Interest not reported on Form 1099-INT. Even if you don't receive a Form 1099-INT, you must still report all of your interest income. For example, you may receive distributive shares of interest from partnerships or S corporations. This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, De-duction, Credits, etc.; or Schedule K-1 (Form 1120-S), Shareholder's Share of Income, De-ductions, Credits, etc.

Nominees. Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf.

If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Pub. 550, or the Schedule B (Form 1040) instruc-tions.

Incorrect amount. If you receive a Form 1099-INT that shows an incorrect amount or other incorrect information, you should ask the issuer for a corrected form. The new Form 1099-INT you receive will have the “CORREC-TED” box checked.

Form 1099-OID. Reportable interest income may also be shown on Form 1099-OID, Original Issue Discount. For more information about amounts shown on this form, see Original Issue Discount (OID), later in this chapter.

Exempt-interest dividends. Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, aren't included in your taxable income. (However, see Information-reporting require-ment next.) Exempt-interest dividends should be shown on Form 1099-DIV, box 11. You don't reduce your basis for distributions that are ex-empt-interest dividends.

Information-reporting requirement. Al-though exempt-interest dividends aren't taxa-ble, you must show them on your tax return if you have to file. This is an information-reporting requirement and doesn't change the exempt-in-terest dividends into taxable income.

Note. Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. See Alternative Minimum Tax (AMT) in chapter 13 for more in-formation. Chapter 1 of Pub. 550 contains a dis-cussion on private activity bonds under State or Local Government Obligations.

Interest on VA dividends. Interest on insur-ance dividends left on deposit with the

Department of Veterans Affairs (VA) isn't taxa-ble. This includes interest paid on dividends on converted United States Government Life Insur-ance and on National Service Life Insurance policies.

Individual retirement arrangements (IRAs). Interest on a Roth IRA generally isn't taxable. Interest on a traditional IRA is tax deferred. You generally don't include interest earned in an IRA in your income until you make withdrawals from the IRA. See chapter 9.

Taxable Interest

Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. The following are some sources of taxable interest.

Dividends that are actually interest. Certain distributions commonly called dividends are ac-tually interest. You must report as interest so-called dividends on deposits or on share ac-counts in:

Cooperative banks,

Credit unions,

Domestic building and loan associations,

Domestic savings and loan associations,

Federal savings and loan associations, and

Mutual savings banks.

The “dividends” will be shown as interest in-come on Form 1099-INT.

Money market funds. Money market funds pay dividends and are offered by nonbank fi-nancial institutions, such as mutual funds and stock brokerage houses. Generally, amounts you receive from money market funds should be reported as dividends, not as interest.

Certificates of deposit and other deferred interest accounts. If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. You must generally include this interest in your income when you actually receive it or are enti-tled to receive it without paying a substantial penalty. The same is true for accounts that ma-ture in 1 year or less and pay interest in a single payment at maturity. If interest is deferred for more than 1 year, see Original Issue Discount (OID), later.

Interest subject to penalty for early with-drawal. If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. You must report the total amount of interest paid or credited to your ac-count during the year, without subtracting the penalty. See Penalty on early withdrawal of sav-ings in chapter 1 of Pub. 550 for more informa-tion on how to report the interest and deduct the penalty.

Money borrowed to invest in certificate of deposit. The interest expense you pay on money borrowed from a bank or savings institu-tion to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two sep-arate items. You must report the total interest

income you earn on the certificate in your in-come. If you itemize deductions, you can de-duct the interest you pay as investment interest, up to the amount of your net investment in-come. See Interest Expenses in chapter 3 of Pub. 550.

Example. You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. The cer-tificate earned $575 at maturity in 2020, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. The bank gives you a Form 1099-INT for 2020 showing the $575 in-terest you earned. The bank also gives you a statement showing that you paid $310 of inter-est for 2020. You must include the $575 in your income. If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit.

Gift for opening account. If you receive non-cash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest.

For deposits of less than $5,000, gifts or services valued at more than $10 must be re-ported as interest. For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. The value is deter-mined by the cost to the financial institution.

Example. You open a savings account at your local bank and deposit $800. The account earns $20 interest. You also receive a $15 cal-culator. If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. You must report $35 interest income on your tax return.

Interest on insurance dividends. Interest on insurance dividends left on deposit with an in-surance company that can be withdrawn annu-ally is taxable to you in the year it is credited to your account. However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs.

Prepaid insurance premiums. Any increase in the value of prepaid insurance premiums, ad-vance premiums, or premium deposit funds is interest if it is applied to the payment of premi-ums due on insurance policies or made availa-ble for you to withdraw.

U.S. obligations. Interest on U.S. obligations issued by any agency or instrumentality of the United States, such as U.S. Treasury bills, notes, and bonds, is taxable for federal income tax purposes.

Interest on tax refunds. Interest you receive on tax refunds is taxable income.

Interest on condemnation award. If the con-demning authority pays you interest to compen-sate you for a delay in payment of an award, the interest is taxable.

Installment sale payments. If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments.

Generally, that interest is taxable when you re-ceive it. If little or no interest is provided for in a deferred payment contract, part of each pay-ment may be treated as interest. See Unstated Interest and Original Issue Discount in Pub. 537, Installment Sales.

Interest on annuity contract. Accumulated interest on an annuity contract you sell before its maturity date is taxable.

Usurious interest. Usurious interest is interest charged at an illegal rate. This is taxable as in-terest unless state law automatically changes it to a payment on the principal.

Interest income on frozen deposits. Ex-clude from your gross income interest on frozen deposits. A deposit is frozen if, at the end of the year, you can't withdraw any part of the deposit because:

The financial institution is bankrupt or in-solvent, or

The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent.

The amount of interest you must exclude is the interest that was credited on the frozen de-posits minus the sum of:

The net amount you withdrew from these deposits during the year, and

The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit).

If you receive a Form 1099-INT for interest in-come on deposits that were frozen at the end of 2020, see Frozen deposits under How To Re-port Interest Income in chapter 1 of Pub. 550 for information about reporting this interest income exclusion on your tax return.

The interest you exclude is treated as credi-ted to your account in the following year. You must include it in income in the year you can withdraw it.

Example. $100 of interest was credited on your frozen deposit during the year. You with-drew $80 but couldn't withdraw any more as of the end of the year. You must include $80 in your income and exclude $20 from your income for the year. You must include the $20 in your income for the year you can withdraw it.

Bonds traded flat. If you buy a bond at a dis-count when interest has been defaulted or when the interest has accrued but hasn't been paid, the transaction is described as trading a bond flat. The defaulted or unpaid interest isn't income and isn't taxable as interest if paid later. When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or ac-crued. See Bonds Sold Between Interest Dates, later, for more information.

Below-market loans. In general, a below-mar-ket loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. If you are the lender of a below-market loan, you may

Chapter 6Interest IncomePage 55

have additional interest income. See Be-low-Market Loans in chapter 1 of Pub. 550 for more information.

U.S. Savings Bonds

This section provides tax information on U.S. savings bonds. It explains how to report the in-terest income on these bonds and how to treat transfers of these bonds.

For other information on U.S. savings bonds, write to:

For Series EE and I electronic savings bonds:

Series EE and Series I

Treasury Retail Securities Services P.O. Box 7015

Minneapolis, MN 55480-7015

For Series EE and I paper savings bonds:

Series EE and Series I

Treasury Retail Securities Services P.O. Box 214

Minneapolis, MN 55480-0214

For Series HH and Series H savings bonds:

Series HH and Series H

Treasury Retail Securities Services P.O. Box 2186

Minneapolis, MN 55480-2186

Or, on the Internet, visit TreasuryDirect.gov/indiv/indiv.htm.

Accrual method taxpayers. If you use an ac-crual method of accounting, you must report in-terest on U.S. savings bonds each year as it ac-crues. You can't postpone reporting interest until you receive it or until the bonds mature. Accrual methods of accounting are explained in chapter 1 under Accounting Methods.

Cash method taxpayers. If you use the cash method of accounting, as most individual tax-payers do, you generally report the interest on U.S. savings bonds when you receive it. The cash method of accounting is explained in chapter 1 under Accounting Methods. But see Reporting options for cash method taxpayers, later.

Series H and HH bonds. These bonds were issued at face value in exchange for other sav-ings bonds. Series HH bonds were issued be-tween 1980 and 2004. They mature 20 years after issue. Series HH bonds that have not ma-tured pay interest twice a year by direct deposit to your bank account. If you are a cash method taxpayer, you must report this interest as in-come in the year you receive it.

Series H bonds were issued before 1980. All Series H bonds have matured and are no lon-ger earning interest. In addition to the twice-a-year interest payments, most H/HH bonds also have a deferred interest component. The re-porting of this as income is addressed later in this chapter.

Series EE and Series I bonds. Interest on these bonds is payable when you redeem the bonds. The difference between the purchase

Page 56Chapter 6Interest Income

price and the redemption value is taxable inter-est.

Series E and EE bonds. Series E bonds were issued before 1980. All Series E bonds have matured and are no longer earning inter-est. Series EE bonds were first offered in Janu-ary 1980 and have a maturity period of 30 years; they were offered in paper (definitive) form until 2012. Paper Series EE and Series E bonds were issued at a discount and increase in value as they earn interest. Electronic (book-entry) Series EE bonds were first offered in 2003; they are issued at face value and in-crease in value as they earn interest. For all Series E and Series EE bonds, the purchase price plus all accrued interest is payable to you at redemption.

Series I bonds. Series I bonds were first of-fered in 1998. These are inflation-indexed bonds issued at face value with a maturity pe-riod of 30 years. Series I bonds increase in value as they earn interest. The face value plus all accrued interest is payable to you at redemp-tion.

Reporting options for cash method tax-payers. If you use the cash method of report-ing income, you can report the interest on Ser-ies EE, Series E, and Series I bonds in either of the following ways.

1. Method 1. Postpone reporting the interest until the earlier of the year you cash or dis-pose of the bonds or the year they mature. (However, see Savings bonds traded, later.)

2. Method 2. Choose to report the increase in redemption value as interest each year.

You must use the same method for all Series EE, Series E, and Series I bonds you own. If you don't choose method 2 by reporting the in-crease in redemption value as interest each year, you must use method 1.

If you plan to cash your bonds in the TIP same year you will pay for higher edu-cation expenses, you may want to use method 1 because you may be able to exclude the interest from your income. To learn how,

see Education Savings Bond Program, later.

Change from method 1. If you want to change your method of reporting the interest from method 1 to method 2, you can do so with-out permission from the IRS. In the year of change, you must report all interest accrued to date and not previously reported for all your bonds.

Once you choose to report the interest each year, you must continue to do so for all Series EE, Series E, and Series I bonds you own and for any you get later, unless you request per-mission to change, as explained next.

Change from method 2. To change from method 2 to method 1, you must request per-mission from the IRS. Permission for the change is automatically granted if you send the IRS a statement that meets all the following re-quirements.

1. You have typed or printed the following number at the top: “131.”

2. It includes your name and social security number under “131.”

3. It includes the year of change (both the beginning and ending dates).

4. It identifies the savings bonds for which you are requesting this change.

5. It includes your agreement to:

a. Report all interest on any bonds ac-quired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and

b. Report all interest on the bonds ac-quired before the year of change when the interest is realized upon dis-position, redemption, or final maturity, whichever is earliest, with the excep-tion of the interest reported in prior tax years.

You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions).

You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. To get this extension, you must have filed your original re-turn for the year of the change by the due date (including extensions).

Instead of filing this statement, you can re-quest permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. In that case, fol-low the form instructions for an automatic change. No user fee is required.

Co-owners. If a U.S. savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond.

One co-owner's funds used. If you used your funds to buy the bond, you must pay the tax on the interest. This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Under these circumstances, the co-owner who redeemed the bond will re-ceive a Form 1099-INT at the time of redemp-tion and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. The co-owner who re-deemed the bond is a “nominee.” See Nominee distributions under How To Report Interest In-come in chapter 1 of Pub. 550 for more informa-tion about how a person who is a nominee re-ports interest income belonging to another person.

Both co-owners' funds used. If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid.

Community property. If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. If you file separate returns, each of you must generally report one-half of the bond inter-est. For more information about community property, see Pub. 555.

Table 6-1. Who Pays the Tax on U.S. Savings Bond Interest

IF...	THEN the interest must be reported by...
you buy a bond in your name and the name of another	you.
person as co-owners, using only your own funds
you buy a bond in the name of another person, who is the	the person for whom you bought the bond.
sole owner of the bond
you and another person buy a bond as co-owners, each	both you and the other co-owner, in proportion to the
contributing part of the purchase price	amount each paid for the bond.
you and your spouse, who live in a community property	you and your spouse. If you file separate returns, both you
state, buy a bond that is community property	and your spouse generally report one-half of the interest.

between the accrued interest of $523 on the Series EE bonds and the $223 cash received on the trade.

Choice to report interest in year of trade. You could have chosen to treat all of the previ-ously unreported accrued interest on the Series

AE. or Series E bonds traded for Series HH bonds as income in the year of the trade. If you made this choice, it is treated as a change from method 1. See Change from method 1, earlier.

Table 6-1. These rules are also shown in Table 6-1.

Ownership transferred. If you bought Series E, Series EE, or Series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. But, if the bonds were reissued in your name alone, you don't have to report the interest ac-crued at that time.

This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to di-vorce.

Purchased jointly. If you and a co -owner each contributed funds to buy Series E, Series EE, or Series I bonds jointly and later have the bonds reissued in the co -owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previ-ously reported. The former co-owner doesn't have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. This interest, however, as well as all interest earned after the reissue, is income to the former co-owner.

This income -reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. But the new co -owner will report only his or her share of the interest earned after the transfer.

If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned be-fore the bonds were reissued.

Example 1. You and your spouse each spent an equal amount to buy a $1,000 Series

AE. savings bond. The bond was issued to you and your spouse as co-owners. You both post-pone reporting interest on the bond. You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. At that time, neither you nor your spouse has to report the interest earned to the date of reissue.

Example 2. You bought a $1,000 Series

AE. savings bond entirely with your own funds. The bond was issued to you and your spouse as co-owners. You both postpone reporting in-terest on the bond. You later have the bond re-issued as two $500 bonds, one in your name

and one in your spouse's name. You must re-port half the interest earned to the date of reis-sue.

Transfer to a trust. If you own Series E, Ser-ies EE, or Series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not al-ready reported it. However, if you are consid-ered the owner of the trust and if the increase in value both before and after the transfer contin-ues to be taxable to you, you can continue to defer reporting the interest earned each year. You must include the total interest in your in-come in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier.

The same rules apply to previously unrepor-ted interest on Series EE or Series E bonds if the transfer to a trust consisted of Series HH or Series H bonds you acquired in a trade for the Series EE or Series E bonds. See Savings bonds traded, later.

Decedents. The manner of reporting interest income on Series E, Series EE, or Series I bonds, after the death of the owner (decedent), depends on the accounting and income-report-ing methods previously used by the decedent. This is explained in chapter 1 of Pub. 550.

Savings bonds traded. If you postponed re-porting the interest on your Series EE or Series E bonds, you didn't recognize taxable income when you traded the bonds for Series HH or Series H bonds, unless you received cash in the trade. (You can't trade Series I bonds for Series HH bonds. After August 31, 2004, you can't trade any other series of bonds for Series

AH. bonds.) Any cash you received is income up to the amount of the interest earned on the bonds traded. When your Series HH or Series H bonds mature, or if you dispose of them be-fore maturity, you report as interest the differ-ence between their redemption value and your cost. Your cost is the sum of the amount you paid for the traded Series EE or Series E bonds plus any amount you had to pay at the time of the trade.

Example. You traded Series EE bonds (on which you postponed reporting the interest) for $2,500 in Series HH bonds and $223 in cash. You reported the $223 as taxable income on your tax return. At the time of the trade, the Ser-ies EE bonds had accrued interest of $523 and a redemption value of $2,723. You hold the Ser-ies HH bonds until maturity, when you receive $2,500. You must report $300 as interest in-come in the year of maturity. This is the differ-ence between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the Series EE bonds). It is also the difference

Form 1099 -INT for U.S. savings bonds inter-est. When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Box 3 of your Form 1099-INT should show the interest as the differ-ence between the amount you received and the amount paid for the bond. However, your Form 1099 -INT may show more interest than you have to include on your income tax return. For example, this may happen if any of the following are true.

You chose to report the increase in the re-demption value of the bond each year. The interest shown on your Form 1099-INT won't be reduced by amounts previously included in income.

You received the bond from a decedent. The interest shown on your Form 1099-INT won't be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return.

Ownership of the bond was transferred. The interest shown on your Form 1099-INT won't be reduced by interest that accrued before the transfer.

You were named as a co-owner, and the other co-owner contributed funds to buy the bond. The interest shown on your Form 1099-INT won't be reduced by the amount you received as nominee for the other co-owner. (See Co-owners, earlier in this chapter, for more information about the re-porting requirements.)

You received the bond in a taxable distri-bution from a retirement or profit-sharing plan. The interest shown on your Form 1099-INT won't be reduced by the interest portion of the amount taxable as a distribu-tion from the plan and not taxable as inter-est. (This amount is generally shown on Form 1099-R, Distributions From Pen-sions, Annuities, Retirement or Profit-Shar-ing Plans, IRAs, Insurance Contracts, etc., for the year of distribution.)

For more information on including the cor-rect amount of interest on your return, see How To Report Interest Income, later. Pub. 550 in-cludes examples showing how to report these amounts.

Interest on U.S. savings bonds is ex-TIP empt from state and local taxes. The Form 1099-INT you receive will indi-cate the amount that is for U.S. savings bond in-

terest in box 3.

Chapter 6Interest IncomePage 57

Education Savings Bond Program

You may be able to exclude from income all or part of the interest you receive on the redemp-tion of qualified U.S. savings bonds during the year if you pay qualified higher educational ex-penses during the same year. This exclusion is known as the Education Savings Bond Pro-gram.

You don't qualify for this exclusion if your fil-ing status is married filing separately.

Form 8815. Use Form 8815 to figure your exclusion. Attach the form to your Form 1040 or 1040-SR.

Qualified U.S. savings bonds. A qualified U.S. savings bond is a Series EE bond issued after 1989 or a Series I bond. The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). You must be at least 24 years old before the bond's issue date. For example, a bond bought by a parent and issued in the name of his or her child under age 24 doesn't qualify for the exclu-sion by the parent or child.

The issue date of a bond may be ear-

lier than the date the bond is pur-CAUTION chased because the issue date as-signed to a bond is the first day of the month in which it is purchased.

Beneficiary. You can designate any individual (including a child) as a beneficiary of the bond.

Verification by IRS. If you claim the exclu-sion, the IRS will check it by using bond re-demption information from the Department of the Treasury.

Qualified expenses. Qualified higher edu-cation expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eli-gible educational institution.

Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account (ESA).

Qualified expenses don't include expenses for room and board or for courses involving sports, games, or hobbies that aren't part of a degree- or certificate-granting program.

Eligible educational institutions. These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to par-ticipate in student aid programs run by the U.S. Department of Education.

Reduction for certain benefits. You must reduce your qualified higher education expen-ses by all of the following tax-free benefits.

1. Tax-free part of scholarships and fellow-ships (see Scholarships and fellowships in chapter 8).

2. Expenses used to figure the tax-free por-tion of distributions from a Coverdell ESA.

3. Expenses used to figure the tax-free por-tion of distributions from a qualified tuition program.

Page 58Chapter 6Interest Income

4. Any tax-free payments (other than gifts or inheritances) received for educational ex-penses, such as:

a. Veterans' educational assistance ben-efits,

b. Qualified tuition reductions, or

c. Employer-provided educational assis-tance.

5. Any expense used in figuring the Ameri-can opportunity and lifetime learning cred-its.

Amount excludable. If the total proceeds (interest and principal) from the qualified U.S. savings bonds you redeem during the year aren't more than your adjusted qualified higher education expenses for the year, you may be able to exclude all of the interest. If the pro-ceeds are more than the expenses, you may be able to exclude only part of the interest.

To determine the excludable amount, multi-ply the interest part of the proceeds by a frac-tion. The numerator of the fraction is the quali-fied higher education expenses you paid during the year. The denominator of the fraction is the total proceeds you received during the year.

Example. In September 2020, Mark and Joan, a married couple, cashed qualified Series

AE. U.S. savings bonds with a total denomina-tion of $10,000 that they bought in April 2004 for $5,000. They received proceeds of $7,128, representing principal of $5,000 and interest of $2,128. In 2020, they paid $4,000 of their daughter's college tuition. They aren't claiming an education credit for that amount, and their daughter doesn't have any tax-free educational assistance. They can exclude $1,194 ($2,128 × ($4,000 ÷ $7,128)) of interest in 2020. They must include the remaining $934 ($2,128 − $1,194) interest in gross income.

Modified adjusted gross income limit. The interest exclusion is limited if your modified adjusted gross income (modified AGI) is:

$82,350 to $97,350 for taxpayers filing sin-gle or head of household, and

$123,550 to $153,550 for married taxpay-ers filing jointly or for a qualifying widow(er) with dependent child.

You don't qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status.

Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040 or 1040-SR, line 11) figured before the interest ex-clusion, and modified by adding back any:

1. Foreign earned income exclusion,

2. Foreign housing exclusion and deduction,

3. Exclusion of income for bona fide resi-dents of American Samoa,

4. Exclusion for income from Puerto Rico,

5. Exclusion for adoption benefits received under an employer's adoption assistance program,

6. Deduction for student loan interest, and

7. Deduction for tuition and fees.

Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI.

If you have investment interest expense in-curred to earn royalties and other investment in-come, see Education Savings Bond Program in chapter 1 of Pub. 550.

Recordkeeping. If you claim the inter- est exclusion, you must keep a written RECORDS record of the qualified U.S. savings

bonds you redeem. Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and inter-est) of each bond. You can use Form 8818 to record this information. You should also keep bills, receipts, canceled checks, or other docu-mentation that shows you paid qualified higher education expenses during the year.

U.S. Treasury Bills, Notes, and Bonds

Treasury bills, notes, and bonds are direct debts (obligations) of the U.S. Government.

Taxation of interest. Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. You should receive a Form 1099-INT showing the interest paid to you for the year in box 3.

Payments of principal and interest will gen-erally be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system.

Treasury bills. These bills generally have a 4-week, 13-week, 26-week, or 52-week matur-ity period. They are generally issued at a dis-count in the amount of $100 and multiples of $100. The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. Gen-erally, you report this interest income when the bill is paid at maturity. If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity.

Treasury notes and bonds. Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. Maturity periods for Treasury bonds are longer than 10 years. Both are generally issued in denominations of $100 to $1 million and generally pay interest ev-ery 6 months. Generally, you report this interest for the year paid. For more information, see U.S. Treasury Bills, Notes, and Bonds in chap-ter 1 of Pub. 550.

For other information on Treasury notes or bonds, write to:

Treasury Retail Securities Services

P.O. Box 7015

Minneapolis, MN 55480-7015

Or, click on the link to the Treasury website at: TreasuryDirect.gov/indiv/ indiv.htm.

For information on Series EE, Series I, and Series HH savings bonds, see U.S. Savings Bonds, earlier.

Treasury inflation-protected securities (TIPS). These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. For the tax treatment of these se-curities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID) in Pub. 550.

Bonds Sold Between Interest Dates

If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. You must report that part of the sales price as interest income for the year of sale.

If you buy a bond between interest payment dates, part of the purchase price represents in-terest accrued before the date of purchase. When that interest is paid to you, treat it as a nontaxable return of your capital investment, rather than as interest income. See Accrued in-terest on bonds under How To Report Interest Income in chapter 1 of Pub. 550 for information on reporting the payment.

Insurance

Life insurance proceeds paid to you as benefi-ciary of the insured person are usually not taxa-ble. But if you receive the proceeds in install-ments, you must usually report a part of each installment payment as interest income.

For more information about insurance pro-ceeds received in installments, see Pub. 525, Taxable and Nontaxable Income.

Annuity. If you buy an annuity with life insur-ance proceeds, the annuity payments you re-ceive are taxed as pension and annuity income from a nonqualified plan, not as interest in-come. See chapter 5 for information on pension and annuity income from nonqualified plans.

State or Local Government Obligations

Interest on a bond used to finance government operations generally isn't taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions.

Bonds issued after 1982 (including tribal economic development bonds issued after Feb-ruary 17, 2009) by an Indian tribal government are treated as issued by a state. Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function.

For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chap-ter 1 of Pub. 550.

Information-reporting requirement. If you file a tax return, you are required to show any tax-exempt interest you received on your return. This is an information-reporting requirement

only. It doesn't change tax-exempt interest to taxable interest.

Original Issue Discount (OID)

Original issue discount (OID) is a form of inter-est. You generally include OID in your income as it accrues over the term of the debt instru-ment, whether or not you receive any payments from the issuer.

A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. OID is the difference between the stated redemption price at maturity and the issue price.

All debt instruments that pay no interest be-fore maturity are presumed to be issued at a discount. Zero coupon bonds are one example of these instruments.

The OID accrual rules generally don't apply to short-term obligations (those with a fixed ma-turity date of 1 year or less from date of issue). See Discount on Short-Term Obligations in chapter 1 of Pub. 550.

De minimis OID. You can treat the discount as zero if it is less than one -fourth of 1% (0.0025) of the stated redemption price at maturity multi-plied by the number of full years from the date of original issue to maturity. This small discount is known as de minimis OID.

Example 1. You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Because the $20 discount is less than $25, the OID is treated as zero. (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain.)

Example 2. The facts are the same as in Example 1, except that the bond was issued at $950. The OID is $50. Because the $50 dis-count is more than the $25 figured in Exam-ple 1, you must include the OID in income as it accrues over the term of the bond.

Debt instrument bought after original is-sue. If you buy a debt instrument with de mini-mis OID at a premium, the de minimis OID isn't includible in income. If you buy a debt instru-ment with de minimis OID at a discount, the dis-count is reported under the market discount rules. See Market Discount Bonds in chapter 1 of Pub. 550.

Exceptions to reporting OID as current in-come. The OID rules discussed in this chapter don't apply to the following debt instruments.

1. Tax-exempt obligations. (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Pub. 550.)

2. U.S. savings bonds.

3. Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue).

4. Loans between individuals if all the follow-ing are true.

a. The loan is not made in the course of a trade or business of the lender.

b. The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less.

c. Avoiding any federal tax isn't one of the principal purposes of the loan.

5. A debt instrument purchased at a pre-mium.

Form 1099-OID. The issuer of the debt instru-ment (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. It will also show, in box 2, the stated inter-est you must include in your income. Box 8 shows OID on a U.S. Treasury obligation for the part of the year you owned it and isn't included in box 1. A copy of Form 1099 -OID will be sent to the IRS. Don't file your copy with your return. Keep it for your records.

In most cases, you must report the entire amount in boxes 1, 2, and 8 of Form 1099-OID as interest income. But see Refiguring OID shown on Form 1099-OID, later in this discus-sion, for more information.

Form 1099-OID not received. If you had OID for the year but didn't receive a Form 1099-OID, you may have to figure the correct amount of OID to report on your return. See Pub. 1212 for details on how to figure the correct OID.

Nominee. If someone else is the holder of record (the registered owner) of an OID instru-ment belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID.

Refiguring OID shown on Form 1099-OID. You may need to refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following applies.

You bought the debt instrument after its original issue and paid a premium or an ac-quisition premium.

The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments).

If you acquired your debt instrument before January 1, 2014, your payer is only required to report a gross amount of OID in box 1 or box 8 of Form 1099-OID.

For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Pub. 1212 and the instructions for Form 1099-OID.

If you acquired your debt instrument on or after January 1, 2014, unless you have in-formed your payer that you do not want to am-ortize bond premium, your payer must generally report either (1) a net amount of OID that re-flects the offset of OID by the amount of bond premium or acquisition premium amortization for the year, or (2) a gross amount for both the

Chapter 6Interest IncomePage 59

OID and the bond premium or acquisition pre-mium amortization for the year.

Refiguring periodic interest shown on Form 1099-OID. If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates, earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument.

Certificates of deposit (CDs). If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same man-ner as other OID.

This also applies to similar deposit arrange-ments with banks, building and loan associa-tions, etc., including:

Time deposits,

Bonus plans,

Savings certificates,

Deferred income certificates,

Bonus savings certificates, and

Growth savings certificates.

Bearer CDs. CDs issued after 1982 must generally be in registered form. Bearer CDs are CDs not in registered form. They aren't issued in the depositor's name and are transferable from one individual to another.

Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT.

More information. See chapter 1 of Pub. 550 for more information about OID and related top-ics, such as market discount bonds.

When To Report

Interest Income

When to report your interest income depends on whether you use the cash method or an ac-crual method to report income.

Cash method. Most individual taxpayers use the cash method. If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. However, there are special rules for reporting the discount on certain debt instruments. See U.S. Savings Bonds and Original Issue Dis-count (OID), earlier.

Example. On September 1, 2018, you loaned another individual $2,000 at 4% interest, compounded annually. You aren't in the busi-ness of lending money. The note stated that principal and interest would be due on August 31, 2020. In 2020, you received $2,163.20 ($2,000 principal and $163.20 interest). If you use the cash method, you must include in in-come on your 2020 return the $163.20 interest you received in that year.

Constructive receipt. You constructively receive income when it is credited to your ac-count or made available to you. You don't need to have physical possession of it. For example, you are considered to receive interest, divi-dends, or other earnings on any deposit or ac-count in a bank, savings and loan, or similar fi-nancial institution, or interest on life insurance

Page 60Chapter 6Interest Income

policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. This is true even if they aren't yet entered in your passbook.

You constructively receive income on the deposit or account even if you must:

Make withdrawals in multiples of even amounts;

Give a notice to withdraw before making the withdrawal;

Withdraw all or part of the account to with-draw the earnings; or

Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity.

Accrual method. If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. Interest is earned over the term of the debt in-strument.

Example. If, in the previous example, you use an accrual method, you must include the in-terest in your income as you earn it. You would report the interest as follows: 2018, $26.67; 2019, $81.06; and 2020, $55.47.

Coupon bonds. Interest on bearer bonds with detachable coupons is generally taxable in the year the coupon becomes due and payable. It doesn't matter when you mail the coupon for payment.

How To Report

Interest Income

Generally, you report all your taxable interest in-come on Form 1040 or 1040-SR, line 2b.

Schedule B (Form 1040). You must also complete Schedule B (Form 1040), Part I, if you file Form 1040 or 1040-SR and any of the fol-lowing apply.

1. Your taxable interest income is more than $1,500.

2. You are claiming the interest exclusion un-der the Education Savings Bond Program (discussed earlier).

3. You received interest from a seller-fi-nanced mortgage, and the buyer used the property as a home.

4. You received a Form 1099-INT for U.S. savings bond interest that includes amounts you reported in a previous tax year.

5. You received, as a nominee, interest that actually belongs to someone else.

6. You received a Form 1099-INT for interest on frozen deposits.

7. You received a Form 1099-INT for interest on a bond you bought between interest payment dates.

8. You are reporting OID in an amount less than the amount shown on Form 1099-OID.

9. You reduce interest income from bonds by amortizable bond premium.

In Part I, line 1, list each payer's name and the amount received from each. If you received a Form 1099-INT or Form 1099-OID from a bro-kerage firm, list the brokerage firm as the payer.

Reporting tax-exempt interest. Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, in-cluding zero coupon municipal bonds) reported on Form 1099-INT, box 8, and exempt-interest dividends from a mutual fund or other regulated investment company reported on Form 1099-DIV, box 11. Add these amounts to any other tax-exempt interest you received. Report the total on line 2a of Form 1040 or 1040-SR.

Form 1099-INT, box 9, and Form 1099-DIV, box 12, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 11. Don't add the amounts in Form 1099-INT, box 9, and Form 1099-DIV, box 12, to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 11.

Don't report interest from an IRA as

tax-exempt interest.

CAUTION

Form 1099-INT. Your taxable interest income, except for interest from U.S. savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. Add this amount to any other taxable interest income you received. See the instruc-tions for Form 1099-INT if you have interest from a security acquired at a premium. You must report all of your taxable interest income even if you don't receive a Form 1099-INT. Contact your financial institution if you don't re-ceive a Form 1099-INT by February 15. Your identifying number may be truncated on any pa-per Form 1099-INT you receive.

If you forfeited interest income because of the early withdrawal of a time deposit, the de-ductible amount will be shown on Form 1099-INT in box 2. See Penalty on early with-drawal of savings in chapter 1 of Pub. 550.

Box 3 of Form 1099-INT shows the interest income you received from U.S. savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Generally, add the amount shown in box 3 to any other taxable interest income you received. If part of the amount shown in box 3 was previously included in your interest income, see U.S. savings bond interest previously re-ported, later. If you acquired the security at a premium, see the instructions for Form 1099-INT.

Box 4 of Form 1099-INT will contain an amount if you were subject to backup withhold-ing. Include the amount from box 4 on Form 1040 or 1040-SR, line 25b (federal income tax withheld).

Box 5 of Form 1099-INT shows investment expenses. See chapter 12 for more information about investment expenses.

Box 6 of Form 1099-INT shows foreign tax paid. You may be able to claim this tax as a de-duction or a credit on your Form 1040 or 1040-SR. See your tax return instructions.

Box 7 of Form 1099-INT shows the country or U.S. possession to which the foreign tax was paid.

U.S. savings bond interest previously re-ported. If you received a Form 1099-INT for U.S. savings bond interest, the form may show interest you don't have to report. See Form 1099-INT for U.S. savings bonds interest, ear-lier.

On Schedule B (Form 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.

1. Several rows above line 2, enter a subtotal of all interest listed on line 1.

2. Below the subtotal, enter “U.S. Savings Bond Interest Previously Reported” and enter amounts previously reported or inter-est accrued before you received the bond.

3. Subtract these amounts from the subtotal and enter the result on line 2.

More information. For more information about how to report interest income, see chapter 1 of Pub. 550 or the instructions for the form you must file.

7.

Social Security and Equivalent Railroad Retirement Benefits

Introduction

This chapter explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. It explains the following topics.

How to figure whether your benefits are taxable.

How to report your taxable benefits.

How to use the social security benefits worksheet (with examples).

Deductions related to your benefits and how to treat repayments that are more than the benefits you received during the year.

Social security benefits include monthly re-tirement, survivor, and disability benefits. They don’t include Supplemental Security Income (SSI) payments, which aren’t taxable.

Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad em-ployee or beneficiary would have been entitled to receive under the social security system. They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 bene-fits.

If you received these benefits during 2020, you should have received a Form SSA -1099, Social Security Benefit Statement; or Form RRB-1099, Payments by the Railroad Retire-ment Board. These forms show the amounts re-ceived and repaid, and taxes withheld for the year. You may receive more than one of these forms for the same year. You should add the amounts shown on all the Forms SSA-1099 and Forms RRB-1099 you receive for the year to determine the total amounts received and re-paid, and taxes withheld for that year. See the Appendix at the end of Pub. 915, Social Secur-ity and Equivalent Railroad Retirement Benefits, for more information.

Note. When the term “benefits” is used in this chapter, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits.

my Social Security account. Social security beneficiaries may quickly and easily obtain in-formation from the SSA's website with a my So-cial Security account to:

Keep track of your earnings and verify them every year,

Get an estimate of your future benefits if you are still working,

Get a letter with proof of your benefits if you currently receive them,

Change your address,

Start or change your direct deposit,

Get a replacement Medicare card, and

Get a replacement Form SSA-1099 for the tax season.

For more information and to set up an account, go to SSA.gov/myaccount.

What isn’t covered in this chapter. This chapter doesn’t cover the tax rules for the fol-lowing railroad retirement benefits.

Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits.

Tier 2 benefits.

Vested dual benefits.

Supplemental annuity benefits.

For information on these benefits, see Pub.

575, Pension and Annuity Income.

This chapter doesn’t cover the tax rules for social security benefits reported on Form SSA-1042S, Social Security Benefit Statement; or Form RRB-1042S, Statement for Nonresi-dent Alien Recipients of Payments by the Rail-road Retirement Board. For information about these benefits, see Pub. 519, U.S. Tax Guide for Aliens; and Pub. 915, Social Security and Equivalent Railroad Retirement Benefits.

This chapter also doesn’t cover the tax rules for foreign social security benefits. These bene-fits are taxable as annuities, unless they are ex-empt from U.S. tax or treated as a U.S. social security benefit under a tax treaty.

Useful Items

You may want to see:

Publication

505 Tax Withholding and Estimated Tax

519 U.S. Tax Guide for Aliens

575 Pension and Annuity Income

590-A Contributions to Individual Retirement Arrangements (IRAs)

915 Social Security and Equivalent Railroad Retirement Benefits

Forms (and Instructions) 1040-ES Estimated Tax for Individuals

SSA-1099 Social Security Benefit Statement

RRB-1099 Payments by the Railroad Retirement Board

W-4V Voluntary Withholding Request

For these and other useful items, go to IRS.gov/ Forms.

Are Any of Your Benefits Taxable?

To find out whether any of your benefits may be taxable, compare the base amount (explained later) for your filing status with the total of:

1. One-half of your benefits; plus

2. All your other income, including tax-ex-empt interest.

Exclusions. When making this comparison, don’t reduce your other income by any exclu-sions for:

Interest from qualified U.S. savings bonds,

Employer-provided adoption benefits,

Foreign earned income or foreign housing, or

Income earned by bona fide residents of American Samoa or Puerto Rico.

Children's benefits. The rules in this chapter apply to benefits received by children. See Who is taxed, later.

Figuring total income. To figure the total of one-half of your benefits plus your other in-come, use Worksheet 7-1, discussed later. If the total is more than your base amount, part of your benefits may be taxable.

If you are married and file a joint return for 2020, you and your spouse must combine your incomes and your benefits to figure whether any of your combined benefits are taxable. Even if your spouse didn’t receive any benefits, you must add your spouse's income to yours to fig-ure whether any of your benefits are taxable.

If the only income you received during TIP 2020 was your social security or the SSEB portion of tier 1 railroad retire-ment benefits, your benefits generally aren’t

taxable and you probably don’t have to file a re-turn. If you have income in addition to your ben-efits, you may have to file a return even if none of your benefits are taxable. See Do I Have To

Chapter 7Social Security and Equivalent Railroad Retirement BenefitsPage 61

File a Return? in chapter 1, earlier; Pub. 501, Dependents, Standard Deduction, and Filing In-formation; or your tax return instructions to find out if you have to file a return.

Base amount. Your base amount is:

$25,000 if you are single, head of house-hold, or qualifying widow(er);

$25,000 if you are married filing separately and lived apart from your spouse for all of 2020;

$32,000 if you are married filing jointly; or

$0 if you are married filing separately and lived with your spouse at any time during 2020.

Worksheet 7-1. You can use Worksheet 7-1 to figure the amount of income to compare with your base amount. This is a quick way to check whether some of your benefits may be taxable.

Worksheet 7-1. A Quick Way To Check if Your Benefits May Be Taxable

Note. If you plan to file a joint income tax return, include your spouse's amounts, if any, on lines A, C, and D.

A. Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Include the full amount of any lump-sum benefit payments received in 2020, for 2020 and earlier years. (If you received more than one form, combine the amounts from box 5 and

enter the total.) . . . . . . . A. Note. If the amount on line A is zero or less, stop here; none of your benefits are taxable this year.

B. Multiply line A by 50%		B.
(0.50)..........	. . .
C. Enter your total income that
is taxable (excluding line A),
such as pensions, wages,
interest, ordinary dividends,
and capital gain
distributions. Don’t reduce
your income by any
deductions, exclusions

(listed earlier), or		C.
exemptions . . . . . . . . . .
D. Enter any tax-exempt
interest income, such as
interest on municipal		D.
bonds . . . . . . . . . . . . .
E. Add lines B, C, and D . . .		E.

Note. Compare the amount on line E to your base amount for your filing status. If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. If the amount on line E is more than your base amount, some of your benefits may be taxable and you will need to complete Worksheet 1 in Pub. 915 (or the Social Security Benefits Worksheet in your tax form instructions). If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable, later, under How To Report Your Benefits.

Filled-in Worksheet 7-1. A Quick Way To

Check if Your Benefits May Be Taxable

Note. If you plan to file a joint income tax return, include your spouse's amounts, if any, on lines A, C, and D.

A. Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Include the full amount of any lump-sum benefit payments received in 2020, for 2020 and earlier years. (If you received more than one form, combine the amounts from box 5 and

enter the total.) . . . . . . .

A. $8,200

Note. If the amount on line A is zero or less, stop here; none of your benefits are taxable this year.

B. Multiply line A by 50%	B. 4,100
(0.50).............

C. Enter your total income that is taxable (excluding line A), such as pensions, wages, interest, ordinary dividends, and capital gain distributions. Don’t reduce your income by any deductions, exclusions (listed earlier), or

exemptions . . . . . . . . . .	C.	27,500
D. Enter any tax-exempt
interest income, such as
interest on municipal	D.	-0-
bonds . . . . . . . . . . . .
E. Add lines B, C, and D . . .	E. $31,600

Note. Compare the amount on line E to your base amount for your filing status. If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. If the amount on line E is more than your base amount, some of your benefits may be taxable and you will need to complete Worksheet 1 in Pub. 915 (or the Social Security Benefits Worksheet in your tax form instructions). If none of your benefits are taxable, but you otherwise must file a tax return, see Benefits not taxable, later, under How To Report Your Benefits.

Example. You and your spouse (both over

65) are filing a joint return for 2020 and you both

received social security benefits during the

year. In January 2021, you received a Form

SSA-1099 showing net benefits of $5,700 in

box 5. Your spouse received a Form SSA-1099

showing net benefits of $2,500 in box 5. You

also received a taxable pension of $26,800 and

interest income of $700. You didn’t have any

tax-exempt interest income. Your benefits aren’t

taxable for 2020 because your income, as fig-

ured in Worksheet 7-1, isn’t more than your

base amount ($32,000) for married filing jointly.

Even though none of your benefits are taxa-

ble, you must file a return for 2020 because

your taxable gross income ($27,500) exceeds

the minimum filing requirement amount for your

filing status.

Page 62Chapter 7Social Security and Equivalent Railroad Retirement Benefits

Who is taxed. Benefits are included in the tax-able income (to the extent they are taxable) of the person who has the legal right to receive the benefits. For example, if you and your child re-ceive benefits, but the check for your child is made out in your name, you must use only your part of the benefits to see whether any benefits are taxable to you. One-half of the part that be-longs to your child must be added to your child's other income to see whether any of those benefits are taxable to your child.

Repayment of benefits. Any repayment of benefits you made during 2020 must be sub-tracted from the gross benefits you received in 2020. It doesn’t matter whether the repayment was for a benefit you received in 2020 or in an earlier year. If you repaid more than the gross benefits you received in 2020, see Repayments More Than Gross Benefits, later.

Your gross benefits are shown in box 3 of Form SSA-1099 or RRB-1099. Your repay-ments are shown in box 4. The amount in box 5 shows your net benefits for 2020 (box 3 minus box 4). Use the amount in box 5 to figure whether any of your benefits are taxable.

Tax withholding and estimated tax. You can choose to have federal income tax withheld from your social security benefits and/or the SSEB portion of your tier 1 railroad retirement benefits. If you choose to do this, you must complete a Form W-4V, Voluntary Withholding Request.

If you don’t choose to have income tax with-held, you may have to request additional with-holding from other income or pay estimated tax during the year. For details, see chapter 4, ear-lier; Pub. 505, Tax Withholding and Estimated Tax; or the Instructions for Form 1040-ES, Esti-mated Tax for Individuals.

How To Report Your Benefits

If part of your benefits are taxable, you must use Form 1040 or 1040-SR.

Reporting on Form 1040 or 1040-SR. Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on line 6a and the taxable part on line 6b. If you are married filing separately and you lived apart from your spouse for all of 2020, also enter “D” to the right of the word “benefits” on line 6a.

Benefits not taxable. Report your net benefits (the total amount from box 5 of all your Forms SSA-1099 and Forms RRB-1099) on Form 1040 or 1040-SR, line 6a. Enter -0- on Form 1040 or 1040-SR, line 6b. If you are married fil-ing separately and you lived apart from your spouse for all of 2020, also enter “D” to the right of the word “benefits” on Form 1040 or 1040-SR, line 6a.

How Much Is Taxable?

If part of your benefits are taxable, how much is taxable depends on the total amount of your benefits and other income. Generally, the higher that total amount, the greater the taxable part of your benefits.

Maximum taxable part. Generally, up to 50% of your benefits will be taxable. However, up to 85% of your benefits can be taxable if either of the following situations applies to you.

The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly).

You are married filing separately and lived with your spouse at any time during 2020.

Which worksheet to use. A worksheet you can use to figure your taxable benefits is in the Instructions for Forms 1040 and 1040-SR. You can use either that worksheet or Worksheet 1 in Pub. 915, unless any of the following situations applies to you.

1. You contributed to a traditional individual retirement arrangement (IRA) and you or

your spouse is covered by a retirement plan at work. In this situation, you must use the special worksheets in Appendix B of Pub. 590-A to figure both your IRA de-duction and your taxable benefits.

2. Situation 1 doesn’t apply and you take an exclusion for interest from qualified U.S. savings bonds (Form 8815), for adoption benefits (Form 8839), for foreign earned income or housing (Form 2555), or for in-come earned in American Samoa (Form 4563) or Puerto Rico by bona fide resi-dents. In this situation, you must use Worksheet 1 in Pub. 915 to figure your tax-able benefits.

3. You received a lump-sum payment for an earlier year. In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Pub. 915. See Lump-sum election next.

Lump-sum election. You must include the taxable part of a lump-sum (retroactive) pay-ment of benefits received in 2020 in your 2020 income, even if the payment includes benefits for an earlier year.

This type of lump-sum benefit payment TIP shouldn’t be confused with the lump-sum death benefit that both the SSA and RRB pay to many of their beneficia-

ries. No part of the lump-sum death benefit is subject to tax.

Generally, you use your 2020 income to fig-ure the taxable part of the total benefits re-ceived in 2020. However, you may be able to figure the taxable part of a lump-sum payment for an earlier year separately, using your in-come for the earlier year. You can elect this method if it lowers your taxable benefits.

Making the election. If you received a lump-sum benefit payment in 2020 that includes benefits for one or more earlier years, follow the instructions in Pub. 915 under Lump-Sum Elec-tion to see whether making the election will lower your taxable benefits. That discussion also explains how to make the election.

Because the earlier year's taxable ben-

efits are included in your 2020 income, CAUTION no adjustment is made to the earlier year's return. Don’t file an amended return for the earlier year.

Examples

The following are a few examples you can use as a guide to figure the taxable part of your ben-efits.

Example 1. George White is single and files Form 1040 for 2020. He received the fol-lowing income in 2020.

Fully taxable pension . . . . . . . .$18,600

Wages from part-time job . . . . .9,400

Taxable interest income . . . . . .990

Total . . . . . . . . . . . . . . . . .^$28,990

George also received social security bene-fits during 2020. The Form SSA-1099 he re-ceived in January 2021 shows $5,980 in box 5.

To figure his taxable benefits, George com-pletes the worksheet shown here.

Be sure to consider the adjustment to TIP income for charitable contributions on Form 1040 or 1040-SR, line 10b, when deciding whether to itemize. You can only claim that adjustment to income if you take the stand-ard deduction. See the Instructions for Forms

1040 and 1040-SR for more information.

Filled-in Worksheet 1.

Figuring Your Taxable Benefits

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter this amount on Form 1040

2.	or 1040-SR, line 6a . . . . . . . $5,980		2,990

	Multiply line 1 by 50% (0.50) . . . . . . .
3.	Combine the amounts from Form 1040
	or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7;		28,990
	and Schedule 1 (Form 1040), line 9 . . .
4.	Enter the amount, if any, from Form			-0-
	1040 or 1040-SR, line 2a . . . . . . . .
5.	Enter the total of any exclusions/
	adjustments for:
	•	Adoption benefits (Form 8839,
	•	line 28),
		Foreign earned income or housing
	•	(Form 2555, lines 45 and 50), and
		Certain income of bona fide
		residents of American Samoa
		(Form 4563, line 15) or Puerto	-0-
		Rico . . . . . . . . . . . . . . . .
6.	Combine lines 2, 3, 4, and 5 . . . . . . .			31,980
7.	Enter the total of the amounts from
	Form 1040 or 1040-SR, line 10b,
	Schedule 1 (Form 1040), lines 10
	through 19, plus any write-in
	adjustments you entered on the dotted
	line next to Schedule 1 (Form 1040),		-0-
	line 22 . . . . . . . . . . . . . . . . . . .

8. Is the amount on line 7 less than the amount on line 6?

No. ^STOP None of your social security benefits are taxable. Enter -0- on Form 1040 or 1040-SR, line 6b.

Yes. Subtract line 7 from line 6 . . . . 31,980

9. If you are:

Married filing jointly, enter $32,000; or

Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of

2020, enter $25,000 . . . . . . . . ^25,000

Chapter 7Social Security and Equivalent Railroad Retirement BenefitsPage 63

Note. If you are married filing separately and you lived with your spouse at any time in 2020, skip lines 9 through 16, multiply line 8 by 85% (0.85), and enter the result on line 17. Then go to line 18.

10. Is the amount on line 9 less than the

amount on line 8?
No. ^STOP None of your benefits are
taxable. Enter -0- on Form 1040 or
1040-SR, line 6b. If you are married
filing separately and you lived apart
from your spouse for all of 2020, be sure
you entered “D” to the right of the word
“benefits” on Form 1040 or 1040-SR,
line 6a.	6,980
Yes. Subtract line 9 from line 8 . . . .
11. Enter $12,000 if married filing jointly; or
$9,000 if single, head of household,
qualifying widow(er), or married filing
separately and you lived apart from	9,000
your spouse for all of 2020 . . . . . . . .
12. Subtract line 11 from line 10. If zero or	-0-
less, enter -0- . . . . . . . . . . . . . . .
13. Enter the smaller of line 10	6,980
or line 11 . . . . . . . . . . . . . . . . .

14. Multiply line 13 by 50% (0.50) . . . . . . 3,490

15.	. .Enterthesmallerofline2orline14	2,990
16.	Multiply line 12 by 85% (0.85). If line 12	-0-
	is zero, enter -0- . . . . . . . . . . . . .
17.	. . . . . . . . . . .Addlines15and16	2,990

18. Multiply line 1 by 85% (0.85) . . . . . . . 5,083

19. Taxable benefits. Enter the smaller of line 17 or line 18. Also enter this amount

on Form 1040 or 1040-SR, line 6b . . . ^$2,990

The amount on line 19 of George's work-sheet shows that $2,990 of his social security benefits is taxable. On line 6a of his Form 1040, George enters his net benefits of $5,980. On line 6b, he enters his taxable benefits of $2,990.

Example 2. Ray and Alice Hopkins file a joint return on Form 1040 for 2020. Ray is re-tired and received a fully taxable pension of $15,500. He also received social security bene-fits, and his Form SSA-1099 for 2020 shows net benefits of $5,600 in box 5. Alice worked during the year and had wages of $14,000. She made a deductible payment to her IRA account of $1,000 and isn’t covered by a retirement plan at work. Ray and Alice have two savings accounts with a total of $250 in taxable interest income. They complete Worksheet 1, shown below, en-tering $29,750 ($15,500 + $14,000 + $250) on line 3. They find none of Ray's social security benefits are taxable. On Form 1040, they enter $5,600 on line 6a and -0- on line 6b.

Filled-in Worksheet 1.

Figuring Your Taxable Benefits

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter this amount on Form 1040

or 1040-SR, line 6a . . . . . . . $5,600

2.			2,800
	Multiply line 1 by 50% (0.50) . . .
3.	Combine the amounts from Form
	1040 or 1040-SR, lines 1, 2b, 3b,
	4b, 5b, 7; and Schedule 1 (Form		29,750
	1040), line 9 . . . . . . . . . . .
4.	Enter the amount, if any, from
	Form 1040 or 1040-SR,		-0-
	line 2a . . . . . . . . . . . . . . .
5.	Enter the total of any exclusions/
	adjustments for:
	•	Adoption benefits (Form 8839,
	•	line 28),
		Foreign earned income or housing
	•	(Form 2555, lines 45 and 50), and
		Certain income of bona fide
		residents of American Samoa
		(Form 4563, line 15) or Puerto		-0-
		Rico . . . . . . . . . . . . . . . .
6.	Combine lines 2, 3, 4, and 5 . . .		32,550
7.	Enter the total of the amounts
	from Form 1040 or 1040-SR,
	line 10b, Schedule 1 (Form
	1040), lines 10 through 19, plus
	any write-in adjustments you
	entered on the dotted line next to
	Schedule 1 (Form 1040),		1,000
	line 22 . . . . . . . . . . . . . . .

8. Is the amount on line 7 less than the amount on line 6?

_No.STOP	None of your social security
benefits are taxable. Enter -0- on Form
1040 or 1040-SR, line 6b.
Yes. Subtract line 7 from		31,550
line 6 .	..............

9. If you are:

Married filing jointly, enter $32,000; or

Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of

2020, enter $25,000 . . . . . . . . ^32,000

Note. If you are married filing separately and you lived with your spouse at any time in 2020, skip lines 9 through 16, multiply line 8 by 85% (0.85), and enter the result on line 17. Then go to line 18.

10. Is the amount on line 9 less than the amount on line 8?

No. ^STOP None of your benefits are taxable. Enter -0- on Form 1040 or

1040-SR, line 6b. If you are married filing separately and you lived apart from your spouse for all of 2020, be sure you entered “D” to the right of the word “benefits” on Form 1040 or 1040-SR, line 6a.

Yes. Subtract line 9 from line 8 . . . .

11. Enter $12,000 if married filing jointly; or $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of 2020 . . . . . . . .

12. Subtract line 11 from line 10. If zero or less, enter -0- . . . . . . . . . . . . . . .

13. Enter the smaller of line 10

or line 11 . . . . . . . . . . . . . . . . .

14. Multiply line 13 by 50% (0.50) . . . . . .

15. Enter the smaller of line 2 or line 14 . .

16. Multiply line 12 by 85% (0.85). If line 12 is zero, enter -0- . . . . . . . . . . . . .

17. Add lines 15 and 16 . . . . . . . . . . .

18. Multiply line 1 by 85% (0.85) . . . . . . .

19. Taxable benefits. Enter the smaller of line 17 or line 18. Also enter this amount

on Form 1040 or 1040-SR, line 6b . . .

Example 3. Joe and Betty Johnson file a joint return on Form 1040 for 2020. Joe is a re-tired railroad worker and in 2020 received the SSEB portion of tier 1 railroad retirement bene-fits. Joe's Form RRB-1099 shows $10,000 in box 5. Betty is a retired government worker and received a fully taxable pension of $38,000. They had $2,300 in taxable interest income plus interest of $200 on a qualified U.S. savings bond. The savings bond interest qualified for the exclusion. They figure their taxable benefits by completing Worksheet 1, shown below. Be-cause they have qualified U.S. savings bond in-terest, they follow the note at the beginning of the worksheet and use the amount from line 2 of their Schedule B (Form 1040) on line 3 of the worksheet instead of the amount from line 2b of their Form 1040. On line 3 of the worksheet, they enter $40,500 ($38,000 + $2,500).

Page 64Chapter 7Social Security and Equivalent Railroad Retirement Benefits

Filled-in Worksheet 1.

Figuring Your Taxable Benefits

Before you begin:

If you are married filing separately and you lived apart from your spouse for all of 2020, enter “D” to the right of the word “benefits” on Form 1040 or 1040-SR, line 6a.

Don’t use this worksheet if you repaid benefits in 2020 and your total repayments (box 4 of Forms SSA-1099 and RRB-1099) were more than your gross benefits for 2020 (box 3 of Forms SSA-1099 and RRB-1099). None of your benefits are taxable for 2020. For more information, see Repayments More Than Gross Benefits, later.

If you are filing Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989, don’t include the amount from line 2b of Form 1040 or 1040-SR on line 3 of this worksheet. Instead, include the amount from Schedule B (Form 1040), line 2.

1. Enter the total amount from box 5 of ALL your Forms SSA-1099 and RRB-1099. Also enter this amount on Form 1040

2.	or 1040-SR, line 6a . . . . . . .$10,000		5,000

	Multiply line 1 by 50% (0.50) . . . . . . .
3.	Combine the amounts from Form 1040
	or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7;		40,500
	and Schedule 1 (Form 1040), line 9 . . .
4.	Enter the amount, if any, from Form			-0-
	1040 or 1040-SR, line 2a . . . . . . . .
5.	Enter the total of any exclusions/
	adjustments for:
	•	Adoption benefits (Form 8839,
	•	line 28),
		Foreign earned income or housing
	•	(Form 2555, lines 45 and 50), and
		Certain income of bona fide
		residents of American Samoa
		(Form 4563, line 15) or Puerto		-0-
		Rico . . . . . . . . . . . . . . . .
6.	Combine lines 2, 3, 4, and 5 . . . . . . .		45,500
7.	Enter the total of the amounts from
	Form 1040 or 1040-SR, line 10b,
	Schedule 1 (Form 1040), lines 10
	through 19, plus any write-in
	adjustments you entered on the dotted
	line next to Schedule 1 (Form 1040),		-0-
	line 22 . . . . . . . . . . . . . . . . . . .

8. Is the amount on line 7 less than the amount on line 6?

No. ^STOP None of your social security benefits are taxable. Enter -0- on Form 1040 or 1040-SR, line 6b.

Yes. Subtract line 7 from line 6 . . . . 45,500

9. If you are:

Married filing jointly, enter $32,000; or

Single, head of household, qualifying widow(er), or married filing separately and you lived apart from your spouse for all of

2020, enter $25,000 . . . . . . . . ^32,000

Note. If you are married filing separately and you lived with your spouse at any time in 2020, skip lines 9 through 16, multiply line 8 by 85% (0.85), and enter the result on line 17. Then go to line 18.

10. Is the amount on line 9 less than the amount on line 8?

No. ^STOP None of your benefits are taxable. Enter -0- on Form 1040 or

1040-SR, line 6b. If you are married filing separately and you lived apart from your spouse for all of 2020, be sure you entered “D” to the right of the word “benefits” on Form 1040 or 1040-SR, line 6a.

Yes. Subtract line 9 from line 8 . . . . 13,500

11. Enter $12,000 if married filing jointly; or $9,000 if single, head of household, qualifying widow(er), or married filing separately and you lived apart from

your spouse for all of 2020 . . . . . . . . ^12,000

12. Subtract line 11 from line 10. If zero or

less, enter -0- . . . . . . . . . . . . . . . ^1,500

13. Enter the smaller of line 10

or line 11 . . . . . . . . . . . . . . . . . ^12,000

14. Multiply line 13 by 50% (0.50) . . . . . . 6,000

15.	. .Enterthesmallerofline2orline14	5,000
16.	Multiply line 12 by 85% (0.85). If line 12	1,275
	is zero, enter -0- . . . . . . . . . . . . .
17.	. . . . . . . . . . .Addlines15and16	6,275

18. Multiply line 1 by 85% (0.85) . . . . . . . 8,500

19. Taxable benefits. Enter the smaller of line 17 or line 18. Also enter this amount

on Form 1040 or 1040-SR, line 6b . . . ^$6,275

More than 50% of Joe's net benefits are tax-able because the income on line 8 of the work-sheet ($45,500) is more than $44,000. (See Maximum taxable part under How Much Is Tax-able, earlier.) Joe and Betty enter $10,000 on Form 1040, line 6a; and $6,275 on Form 1040, line 6b.

Deductions Related to Your Benefits

You may be entitled to deduct certain amounts related to the benefits you receive.

Disability payments. You may have received disability payments from your employer or an in-surance company that you included as income on your tax return in an earlier year. If you re-ceived a lump -sum payment from the SSA or RRB, and you had to repay the employer or in-surance company for the disability payments, you can take an itemized deduction for the part of the payments you included in gross income in the earlier year. If the amount you repay is more than $3,000, you may be able to claim a tax credit instead. Claim the deduction or credit in the same way explained under Repayment of benefits received in an earlier year in the sec-tion Repayments More Than Gross Benefits next.

Repayments More Than Gross Benefits

In some situations, your Form SSA-1099 or Form RRB-1099 will show that the total benefits

you repaid (box 4) are more than the gross ben-efits (box 3) you received. If this occurred, your net benefits in box 5 will be a negative figure (a figure in parentheses) and none of your benefits will be taxable. Don’t use a worksheet in this case. If you receive more than one form, a neg-ative figure in box 5 of one form is used to offset a positive figure in box 5 of another form for that same year.

If you have any questions about this nega-tive figure, contact your local SSA office or your local RRB field office.

Joint return. If you and your spouse file a joint return, and your Form SSA-1099 or RRB-1099 has a negative figure in box 5, but your spou-se's doesn’t, subtract the amount in box 5 of your form from the amount in box 5 of your spouse's form. You do this to get your net bene-fits when figuring if your combined benefits are taxable.

Example. John and Mary file a joint return for 2020. John received Form SSA-1099 show-ing $3,000 in box 5. Mary also received Form SSA-1099 and the amount in box 5 was ($500). John and Mary will use $2,500 ($3,000 minus $500) as the amount of their net benefits when figuring if any of their combined benefits are taxable.

Repayment of benefits received in an ear-lier year. If the total amount shown in box 5 of all of your Forms SSA-1099 and RRB-1099 is a negative figure, you may be able to deduct part of this negative figure that represents benefits you included in gross income in an earlier year if the figure is more than $3,000. If the figure is $3,000 or less, it is a miscellaneous itemized deduction and can no longer be deducted.

Deduction more than $3,000. If this de-duction is more than $3,000, you should figure your tax two ways.

1. Figure your tax for 2020 with the itemized deduction included on Schedule A (Form 1040), line 16.

2. Figure your tax for 2020 in the following steps.

a. Figure the tax without the itemized de-duction included on Schedule A (Form 1040), line 16.

b. For each year after 1983 for which part of the negative figure represents a repayment of benefits, refigure your taxable benefits as if your total bene-fits for the year were reduced by that part of the negative figure. Then refig-ure the tax for that year.

c. Subtract the total of the refigured tax amounts in (b) from the total of your actual tax amounts.

d. Subtract the result in (c) from the re-sult in (a).

Compare the tax figured in methods 1 and 2. Your tax for 2020 is the smaller of the two amounts. If method 1 results in less tax, take the itemized deduction on Schedule A (Form 1040), line 16. If method 2 results in less tax, claim a credit for the amount from step 2c above on Schedule 3 (Form 1040), line 12d. Enter “I.R.C. 1341” on the entry line. If both

Chapter 7Social Security and Equivalent Railroad Retirement BenefitsPage 65

methods produce the same tax, deduct the re-payment on Schedule A (Form 1040), line 16.

8.

Other Income

Reminders

Unemployment compensation. If you re-ceived unemployment compensation but did not receive Form 1099-G, Certain Government Payments, through the mail, you may need to access your information through your state’s website to get your electronic Form 1099-G.

Introduction

You must include on your return all items of in-come you receive in the form of money, prop-erty, and services unless the tax law states that you don’t include them. Some items, however, are only partly excluded from income. This chapter discusses many kinds of income and explains whether they’re taxable or nontaxable.

Income that’s taxable must be reported on your tax return and is subject to tax.

Income that’s nontaxable may have to be shown on your tax return but isn’t taxable.

This chapter begins with discussions of the following income items.

Bartering.

Canceled debts.

Sales parties at which you’re the host or hostess.

Life insurance proceeds.

Partnership income.

S corporation income.

Recoveries (including state income tax re-funds).

Rents from personal property.

Repayments.

Royalties.

Unemployment benefits.

Welfare and other public assistance bene-fits.

These discussions are followed by brief discus-sions of other income items.

Useful Items

You may want to see:

Publication

502 Medical and Dental Expenses

504 Divorced or Separated Individuals

Page 66Chapter 8Other Income

523	Selling Your Home
525	Taxable and Nontaxable Income
544	Sales and Other Dispositions of
	Assets

547 Casualties, Disasters, and Thefts

550 Investment Income and Expenses

4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments

For these and other useful items, go to IRS.gov/ Forms.

Bartering

Bartering is an exchange of property or serv-ices. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you ex-change services with another person and you both have agreed ahead of time on 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 Sched-ule C (Form 1040), Profit or Loss From Busi-ness. However, if the barter involves an ex-change of something other than services, such as in Example 3 below, you may have to use another form or schedule instead.

Example 1. You’re a self-employed attor-ney who performs legal services for a client, a small corporation. The corporation gives you shares of its stock as payment for your serv-ices. You must include the fair market value of the shares in your income on Schedule C (Form 1040) in the year you receive them.

Example 2. You’re 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 pur-chase goods or services offered by other mem-bers 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.

Example 3. 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), Supplemental In-come and Loss, the fair market value of the art-work, and the artist must report as income on Schedule C (Form 1040) the fair rental value of the apartment.

Form 1099-B from barter exchange. If you exchanged property or services through a bar-ter 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 February 16, 2021. It should show the value of cash, property, serv-ices, credits, or scrip you received from ex-

changes during 2020. The IRS will also receive a copy of Form 1099-B.

Canceled Debts

In most cases, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your in-come. You have no income from the canceled debt if it’s intended as a gift to you. A debt in-cludes any indebtedness for which you’re liable or which attaches to property you hold.

If the debt is a nonbusiness debt, report the canceled amount on Schedule 1 (Form 1040), line 8. If it’s a business debt, report the amount on Schedule C (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you’re a farmer).

Form 1099-C. 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.

Interest included in canceled debt. If any interest is forgiven and included in the amount of canceled debt in box 2, the amount of inter-est will also be shown in box 3. Whether or not you must include the interest portion of the can-celed debt in your income depends on whether the interest would be deductible when you paid it. See Deductible debt under Exceptions, later.

If the interest wouldn’t be deductible (such as interest on a personal loan), include in your income the amount from box 2 of Form 1099-C. 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).

Discounted mortgage loan. If your financial institution offers a discount for the early pay-ment of your mortgage loan, the amount of the discount is canceled debt. You must include the canceled amount in your income.

Mortgage relief upon sale or other disposi-tion. If you’re personally liable for a mortgage (recourse debt), and you’re relieved of the mort-gage when you dispose of the property, you may realize gain or loss up to the fair market value of the property. Also, to the extent the mortgage discharge exceeds the fair market value of the property, it’s income from dis-charge of indebtedness unless it qualifies for exclusion under Excluded debt, later. Report any income from discharge of indebtedness on nonbusiness debt that doesn’t qualify for exclu-sion as other income on Schedule 1 (Form 1040), line 8.

If you aren’t personally liable for a mortgage (nonrecourse debt), and you’re relieved of the mortgage when you dispose of the property (such as through foreclosure), that relief is in-cluded in the amount you realize. You may have a taxable gain if the amount you realize ex-ceeds your adjusted basis in the property. Re-port any gain on nonbusiness property as a capital gain.

See Pub. 4681 for more information.

Stockholder debt. If you’re a stockholder in a corporation and the corporation cancels or for-gives your debt to it, the canceled debt is a con-structive distribution that’s generally dividend income to you. For more information, see Pub. 542, Corporations.

If you’re a stockholder in a corporation and you cancel a debt owed to you by the corpora-tion, you generally don’t 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.

Repayment of canceled debt. If you included a canceled amount in your income and later pay the debt, you may be able to file a claim for re-fund for the year the amount was included in in-come. You can file a claim on Form 1040-X if the statute of limitations for filing a claim is still open. The statute of limitations generally doesn’t end until 3 years after the due date of your original return.

Exceptions

There are several exceptions to the inclusion of canceled debt in income. These are explained next.

Student loans. 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 don’t 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:

1. The federal government, a state or local government, or an instrumentality, agency, or subdivision thereof;

2. A tax-exempt public benefit corporation that has assumed control of a state, county, or municipal hospital, and whose employees are considered public employ-ees under state law; or

3. An educational institution:

a. Under an agreement with an entity de-scribed in (1) or (2) that provided the funds to the institution to make the loan, or

b. As part of a program of the institution designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provi-ded by the students (or former stu-dents) are for or under the direction of a governmental unit or a tax-exempt organization described in section 501(c)(3).

A loan to refinance a qualified student loan will also qualify if it was made by an educational institution or a qualified tax-exempt organization under its program designed as described in item 3b above.

Education loan repayment assistance. Education loan repayments made to you by the National Health Service Corps Loan

Repayment Program (NHSC Loan Repayment Program), a state education loan repayment program eligible for funds under the Public Health Service Act, or any other state loan re-payment or loan forgiveness program that’s in-tended to provide for the increased availability of health services in underserved or health pro-fessional shortage areas aren’t taxable.

Deductible debt. You don’t have income from the cancellation of a debt if your payment of the debt would be deductible. This exception ap-plies only if you use the cash method of ac-counting. For more information, see chapter 5 of Pub. 334, Tax Guide for Small Business.

Price reduced after purchase. In most ca-ses, if the seller reduces the amount of debt you owe for property you purchased, you don’t have income from the reduction. The reduction of the debt is treated as a purchase price adjustment and reduces your basis in the property.

Excluded debt. Don’t include a canceled debt in your gross income in the following situations.

The debt is canceled in a bankruptcy case under title 11 of the U.S. Code. See Pub. 908, Bankruptcy Tax Guide.

The debt is canceled when you’re insol-vent. However, you can’t exclude any amount of canceled debt that’s more than the amount by which you’re insolvent. See Pub. 908.

The debt is qualified farm debt and is can-celed by a qualified person. See chapter 3 of Pub. 225, Farmer's Tax Guide.

The debt is qualified real property business debt. See chapter 5 of Pub. 334.

The cancellation is intended as a gift.

The debt is qualified principal residence in-debtedness.

Host or Hostess

If you host a party or event at which sales are made, any gift or gratuity you receive for giving the event is a payment for helping a direct seller make sales. You must report this item as in-come at its fair market value.

Your out-of-pocket party expenses are sub-ject to the 50% limit for meal expenses. For tax years 2018 through 2025, no deduction is al-lowed for any expenses related to activities generally considered entertainment, amuse-ment, or recreation. Taxpayers may continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not con-sidered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or similar business contact. Food and beverages that are provided during entertainment events will not be consid-ered entertainment if purchased separately from the event.

For more information about the 50% limit for meal expenses, see Pub. 463, Travel, Gift, and Car Expenses.

Life Insurance Proceeds

Life insurance proceeds paid to you because of the death of the insured person aren’t 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 pol-icy or an endowment contract. However, inter-est income received as a result of life insurance proceeds may be taxable.

Proceeds not received in installments. 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 in-sured person's death. If the benefit payable at death isn’t specified, you include in your income the benefit payments that are more than the present value of the payments at the time of death.

Proceeds received in installments. If you re-ceive 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 (gener-ally, the total lump sum payable at the death of the insured person) by the number of install-ments to be paid. Include anything over this ex-cluded part in your income as interest.

Surviving spouse. If your spouse died be-fore 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 in-cluded in the installments. If you remarry, you can continue to take the exclusion.

Surrender of policy for cash. If you surren-der a life insurance policy for cash, you must in-clude in income any proceeds that are more than the cost of the life insurance policy. In most cases, 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 weren’t included in your income.

You should receive a Form 1099-R showing the total proceeds and the taxable part. Report these amounts on lines 5a and 5b of Form 1040 or 1040-SR.

More information. For more information, see Life Insurance Proceeds in Pub. 525.

Endowment Contract Proceeds

An endowment contract is a policy under which you’re 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 designa-ted 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 pol-icy. 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 in your income the part

Chapter 8Other IncomePage 67

of the lump-sum payment that’s more than your cost.

Accelerated Death Benefits

Certain amounts paid as accelerated death benefits under a life insurance contract or viati-cal settlement before the insured's death are excluded from income if the insured is termi-nally or chronically ill.

Viatical settlement. This is the sale or assign-ment of any part of the death benefit under a life insurance contract to a viatical settlement pro-vider. A viatical settlement provider is a person who regularly engages in the business of buy-ing or taking assignment of life insurance con-tracts 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 In-ternal Revenue Code.

Exclusion for terminal illness. 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.

Exclusion for chronic illness. If the insured is a chronically ill individual who’s 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. For 2020, this limit is $380. It applies to the total of the accel-erated death benefits and any periodic pay-ments 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 in-surance contracts, see Long-Term Care Insur-ance Contracts under Sickness and Injury Ben-efits in Pub. 525.

Exception. The exclusion doesn’t apply to any amount paid to a person (other than the in-sured) who has an insurable interest in the life of the insured because the insured:

Is a director, officer, or employee of the person; or

Has a financial interest in the person's business.

Form 8853. To claim an exclusion for acceler-ated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return. You don’t have to file Form 8853 to exclude accelerated death benefits paid on the basis of actual expenses incurred.

Public Safety Officer Killed or Injured in the Line of Duty

A spouse, former spouse, and child of a public safety officer killed in the line of duty can ex-clude from gross income survivor benefits

Page 68Chapter 8Other Income

received from a governmental section 401(a) plan attributable to the officer’s service. See section 101(h).

A public safety officer who’s permanently and totally disabled or killed in the line of duty and a surviving spouse or child can exclude from income death or disability benefits re-ceived from the federal Bureau of Justice Assis-tance or death benefits paid by a state program. See section 104(a)(6).

For this purpose, the term “public safety offi-cer” includes law enforcement officers, firefight-ers, chaplains, and rescue squad and ambu-lance crew members. For more information, see Pub. 559, Survivors, Executors, and Adminis-trators.

Partnership Income

A partnership generally isn’t a taxable entity. The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distribu-tive share of these items.

Schedule K-1 (Form 1065). Although a part-nership generally pays no tax, it must file an in-formation return on Form 1065, U.S. Return of Partnership Income, and send Schedule K-1 (Form 1065) to each partner. In addition, the partnership will send each partner a copy of the Partner's Instructions for Schedule K-1 (Form 1065) to help each partner report his or her share of the partnership's income, deductions, credits, and tax preference items.

Keep Schedule K-1 (Form 1065) for your records. Don’t attach it to your RECORDS Form 1040 or 1040-SR, unless you’re specifically required to do so.

For more information on partnerships, see Pub. 541, Partnerships.

Qualified joint venture. If you and your spouse each materially participate as the only members of a jointly owned and operated busi-ness, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. To make this election, you must divide all items of income, gain, loss, deduction, and credit at-tributable to the business between you and your spouse in accordance with your respective in-terests in the venture. For further information on how to make the election and which sched-ule(s) to file, see the instructions for your indi-vidual tax return.

S Corporation Income

In most cases, an S corporation doesn’t pay tax on its income. Instead, the income, losses, de-ductions, and credits of the corporation are passed through to the shareholders based on each shareholder's pro rata share.

Schedule K-1 (Form 1120-S). An S corpora-tion must file a return on Form 1120-S, U.S. In-come Tax Return for an S Corporation, and send Schedule K-1 (Form 1120-S) to each shareholder. In addition, the S corporation will send each shareholder a copy of the Share-holder's Instructions for Schedule K-1 (Form 1120-S) to help each shareholder report his or

her share of the S corporation's income, losses, credits, and deductions.

Keep Schedule K-1 (Form 1120-S) for your records. Don’t attach it to your RECORDS Form 1040 or 1040-SR, unless you’re specifically required to do so.

For more information on S corporations and their shareholders, see the Instructions for Form 1120-S.

Recoveries

A recovery is a return of an amount you deduc-ted or took a credit for in an earlier year. The most common recoveries are refunds, reim-bursements, and rebates of deductions item-ized on Schedule A (Form 1040). You may also have recoveries of nonitemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.

Tax benefit rule. 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 in-crease 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 ear-lier year. For more information, see Pub. 525.

Federal income tax refund. Refunds of fed-eral income taxes aren’t included in your in-come because they’re never allowed as a de-duction from income.

State tax refund. If you received a state or lo-cal income tax refund (or credit or offset) in 2020, you must generally include it in income if you deducted the tax in an earlier year. The payer should send Form 1099-G, Certain Gov-ernment Payments, to you by February 1, 2021. The IRS will also receive a copy of the Form 1099-G. If you file Form 1040 or 1040-SR, use the State and Local Income Tax Refund Work-sheet in the 2020 Instructions for Schedule 1 (Form 1040) to figure the amount (if any) to in-clude in your income. See Pub. 525 for when you must use another worksheet.

If you could choose to deduct for a tax year either:

State and local income taxes, or

State and local general sales taxes, then

the maximum refund that you may have to in-clude in income is limited to the excess of the tax you chose to deduct for that year over the tax you didn’t choose to deduct for that year. For examples, see Pub. 525.

Mortgage interest refund. If you received a refund or credit in 2020 of mortgage interest paid in an earlier year, the amount should be shown in box 4 of your Form 1098, Mortgage In-terest Statement. Don’t subtract the refund amount from the interest you paid in 2020. You may have to include it in your income under the rules explained in the following discussions.

Interest on recovery. Interest on any of the amounts you recover must be reported as inter-est income in the year received. For example, report any interest you received on state or

local income tax refunds on Form 1040 or 1040-SR, line 2b.

Recovery and expense in same year. If the refund or other recovery and the expense occur in the same year, the recovery reduces the de-duction or credit and isn’t reported as income.

Recovery for 2 or more years. If you receive a refund or other recovery that’s 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 allowa-ble deduction for this item for the current year. For information on how to figure the allocation, see Recoveries in Pub. 525.

Itemized Deduction Recoveries

If you recover any amount that you deducted in an earlier year on Schedule A (Form 1040), you must generally include the full amount of the re-covery in your income in the year you receive it.

Where to report. Enter your state or local in-come tax refund on Schedule 1 (Form 1040), line 1, and the total of all other recoveries as other income on Schedule 1 (Form 1040), line 8.

Standard deduction limit. You are generally allowed to claim the standard deduction if you don’t itemize your deductions. Only your item-ized deductions that are more than your stand-ard deduction are subject to the recovery rule (unless you’re required to itemize your deduc-tions). If your total deductions on the earlier year return weren’t more than your income for that year, include in your income this year the lesser of:

Your recoveries, or

The amount by which your itemized deduc-tions exceeded the standard deduction.

Example. For 2019, you filed a joint return. Your taxable income was $60,000 and you weren’t entitled to any tax credits. Your stand-ard deduction was $24,400, and you had item-ized deductions of $26,200. In 2020, you re-ceived the following recoveries for amounts deducted on your 2019 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 de-ductions taken for 2019. The difference be-tween the state and local income tax you de-ducted and your local general sales tax was more than $400.

Your total recoveries are less than the amount by which your itemized deductions ex-ceeded the standard deduction ($26,200 − $24,400 = $1,800), so you must include your to-tal recoveries in your income for 2020. Report the state and local income tax refund of $400

on Schedule 1 (Form 1040), line 1, and the bal-ance of your recoveries, $525, on Schedule 1 (Form 1040), line 8.

Standard deduction for earlier years. To de-termine if amounts recovered in the current year must be included in your income, you must know the standard deduction for your filing sta-tus for the year the deduction was claimed. Look in the instructions for your tax return from prior years to locate the standard deduction for the filing status for that prior year.

Example. You filed a joint return on Form 1040 for 2019 with taxable income of $45,000. Your itemized deductions were $24,550. The standard deduction that you could have claimed was $24,400. In 2020, you recovered $2,100 of your 2019 itemized deductions. None of the re-coveries were more than the actual deductions for 2019. Include $150 of the recoveries in your 2020 income. This is the smaller of your recov-eries ($2,100) or the amount by which your itemized deductions were more than the stand-ard deduction ($24,550 − $24,400 = $150).

Recovery limited to deduction. You don’t in-clude in your income any amount of your recov-ery that’s more than the amount you deducted in the earlier year. The amount you include in your income is limited to the smaller of:

The amount deducted on Schedule A (Form 1040), or

The amount recovered.

Example. During 2019, you paid $1,700 for medical expenses. Of this amount, you deduc-ted $200 on your 2019 Schedule A (Form 1040). In 2020, you received a $500 reimburse-ment from your medical insurance for your 2019 expenses. The only amount of the $500 reim-bursement that must be included in your in-come for 2020 is $200—the amount actually deducted.

Other recoveries. See Recoveries in Pub.

525 if:

You have recoveries of items other than itemized deductions, or

You received a recovery for an item for which you claimed a tax credit (other than investment credit or foreign tax credit) in a prior year.

Rents From Personal Property

If you rent out personal property, such as equip-ment or vehicles, how you report your income and expenses is in most cases determined by:

Whether or not the rental activity is a busi-ness, and

Whether or not the rental activity is con-ducted for profit.

In most cases, if your primary purpose is in-come or profit and you’re involved in the rental activity with continuity and regularity, your rental activity is a business. See Pub. 535, Business Expenses, for details on deducting expenses for both business and not-for-profit activities.

Reporting business income and expenses. If you’re in the business of renting personal property, report your income and expenses on Schedule C (Form 1040). The form instructions have information on how to complete them.

Reporting nonbusiness income. If you aren’t in the business of renting personal property, re-port your rental income on Schedule 1 (Form 1040), line 8. List the type and amount of the in-come on the dotted line next to line 8.

Reporting nonbusiness expenses. If you rent personal property for profit, include your rental expenses in the total amount you enter on Schedule 1 (Form 1040), line 22, and see the instructions there.

If you don’t rent personal property for profit, your deductions are limited and you can’t report a loss to offset other income. See Activity not for profit under Other Income, later.

Repayments

If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your in-come for the year in which you repaid it. Or, if the amount you repaid is more than $3,000, you may be able to take a credit against your tax for the year in which you repaid it. Generally, you can claim a deduction or credit only if the repay-ment qualifies as an expense or loss incurred in your trade or business or in a for-profit transac-tion.

Type of deduction. The type of deduction you’re allowed in the year of repayment de-pends on the type of income you included in the earlier year. You generally deduct the repay-ment on the same form or schedule on which you previously reported it as income. For exam-ple, if you reported it as self-employment in-come, deduct it as a business expense on Schedule C (Form 1040) or Schedule F (Form 1040). If you reported it as a capital gain, de-duct it as a capital loss as explained in the In-structions for Schedule D (Form 1040). If you reported it as wages, unemployment compen-sation, or other nonbusiness income, you may be able to deduct it as an other itemized deduc-tion if the amount repaid is over $3,000.

Beginning in 2018, you can no longer

claim any miscellaneous itemized de-CAUTION ductions, so if the amount repaid was $3,000 or less, you are not able to deduct it from your income in the year you repaid it.

Repaid social security benefits. If you repaid social security benefits or equivalent railroad re-tirement benefits, see Repayment of benefits. in chapter 7.

Repayment of $3,000 or less. If the amount you repaid was $3,000 or less, deduct it from your income in the year you repaid it.

Repayment over $3,000. If the amount you repaid was more than $3,000, you can deduct the repayment as an other itemized deduction on Schedule A (Form 1040), line 16, if you in-cluded the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. However, you can choose to take a credit for

Chapter 8Other IncomePage 69

the year of repayment. Figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

When determining whether the amount

you repaid was more or less than CAUTION $3,000, consider the total amount be-ing repaid on the return. Each instance of re-payment isn’t considered separately.

Method 1. Figure your tax for 2020 claiming a deduction for the repaid amount. If you deduct it as an other itemized deduction, enter it on Schedule A (Form 1040), line 16.

Method 2. Figure your tax for 2020 claiming a credit for the repaid amount. Follow these steps.

1. Figure your tax for 2020 without deducting the repaid amount.

2. Refigure your tax from the earlier year without including in income the amount you repaid in 2020.

3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.

4. Subtract the answer in (3) from the tax for 2020 figured without the deduction (step 1).

If method 1 results in less tax, deduct the amount repaid. If method 2 results in less tax, claim the credit figured in (3) above on Sched-ule 3 (Form 1040), line 12d, by adding the amount of the credit to any other credits on this line, and see the instructions there.

An example of this computation can be found in Pub. 525.

Repaid wages subject to social security and Medicare taxes. If you had to repay an amount that you included in your wages or com-pensation in an earlier year on which social se-curity, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. File a claim for refund using Form 843, Claim for Refund and Request for Abatement.

Repaid wages subject to Additional Medi-care Tax. Employers can’t make an adjust-ment or file a claim for refund for Additional Medicare Tax withholding when there is a re-payment of wages received by an employee in a prior year because the employee determines liability for Additional Medicare Tax on the em-ployee's income tax return for the prior year. If you had to repay an amount that you included in your wages or compensation in an earlier year, and on which Additional Medicare Tax was paid, you may be able to recover the Additional Medicare Tax paid on the amount. To recover Additional Medicare Tax on the repaid wages or compensation, you must file Form 1040-X, Amended U.S. Individual Income Tax Return, for the prior year in which the wages or com-pensation was originally received. See the In-structions for Form 1040-X.

Page 70Chapter 8Other Income

Royalties

Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income.

In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, in-ventor, artist, etc., report your income and ex-penses on Schedule C (Form 1040).

Copyrights and patents. Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inven-tions, are amounts paid to you for the right to use your work over a specified period of time. Royalties are generally based on the number of units sold, such as the number of books, tickets to a performance, or machines sold.

Oil, gas, and minerals. Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extrac-ted from your property. The royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you.

Depletion. If you’re the owner of an eco-nomic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. For information on this subject, see chapter 9 of Pub. 535.

Coal and iron ore. Under certain circum-stances, you can treat amounts you receive from the disposal of coal and iron ore as pay-ments from the sale of a capital asset, rather than as royalty income. For information about gain or loss from the sale of coal and iron ore, see chapter 2 of Pub. 544.

Sale of property interest. If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of property used in a trade or busi-ness under section 1231, not royalty income. Under certain circumstances, the sale is subject to capital gain or loss treatment as explained in the Instructions for Schedule D (Form 1040). For more information on selling section 1231 property, see chapter 3 of Pub. 544.

If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allow-ance.

Part of future production sold. If you own mineral property but sell part of the future pro-duction, in most cases you treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Don’t include it in your in-come or take depletion based on it.

When production begins, you include all the proceeds in your income, deduct all the produc-tion expenses, and deduct depletion from that amount to arrive at your taxable income from the property.

Unemployment Benefits

The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits.

Unemployment compensation. You must in-clude in income all unemployment compensa-tion you receive. You should receive a Form 1099 -G showing in box 1 the total unemploy-ment compensation paid to you. In most cases, you enter unemployment compensation on Schedule 1 (Form 1040), line 7.

If you received unemployment com-

pensation but did not receive Form CAUTION 1099-G, Certain Government Pay-ments, through the mail, you may need to ac-cess your information through your state’s web-site to get your electronic Form 1099-G.

Types of unemployment compensation. Unemployment compensation generally in-cludes any amount received under an unem-ployment compensation law of the United States or of a state. It includes the following benefits.

Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund.

State unemployment insurance benefits.

Railroad unemployment compensation benefits.

Disability payments from a government program paid as a substitute for unemploy-ment compensation. (Amounts received as workers' compensation for injuries or ill-ness aren’t unemployment compensation. See chapter 5 for more information.)

Trade readjustment allowances under the Trade Act of 1974.

Unemployment assistance under the Dis-aster Relief and Emergency Assistance Act.

Unemployment assistance under the Air-line Deregulation Act of 1978 Program.

Governmental program. If you contribute to a governmental unemployment compensa-tion program and your contributions aren’t de-ductible, amounts you receive under the pro-gram aren’t included as unemployment compensation until you recover your contribu-tions. If you deducted all of your contributions to the program, the entire amount you receive un-der the program is included in your income.

Repayment of unemployment compensa-tion. If you repaid in 2020 unemployment com-pensation you received in 2020, subtract the amount you repaid from the total amount you received and enter the difference on Schedule 1 (Form 1040), line 7. On the dotted line next to your entry, enter “Repaid” and the amount you repaid. If you repaid unemployment compensa-tion in 2020 that you included in income in an earlier year, you can deduct the amount repaid

on Schedule A (Form 1040), line 16, if you item-ize deductions and the amount is more than $3,000. See Repayments, earlier.

Tax withholding. You can choose to have federal income tax withheld from your unem-ployment 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 don’t choose to have tax withheld

from your unemployment compensa-CAUTION tion, you may be liable for estimated tax. If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. For more information on estimated tax, see chap-ter 4.

Supplemental unemployment benefits. Benefits received from an employer-financed fund (to which the employees didn’t contribute) aren’t unemployment compensation. They are taxable as wages. For more information, see Supplemental Unemployment Benefits in sec-tion 5 of Pub. 15-A, Employer's Supplemental Tax Guide. Report these payments on line 1 of Form 1040 or 1040-SR.

Repayment of benefits. You may have to repay some of your supplemental unemploy-ment 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 to-tal benefits by the amount you repay. If you re-pay the benefits in a later year, you must in-clude the full amount of the benefits received 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 or 1040-SR. Include the repayment on Schedule 1 (Form 1040), line 22, and see the instructions there. 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 more infor-mation on this, see Repayments, earlier.

Private unemployment fund. Unemployment benefit payments from a private (nonunion) fund to which you voluntarily contribute are tax-able only if the amounts you receive are more than your total payments into the fund. Report the taxable amount on Schedule 1 (Form 1040), line 8.

Payments by a union. Benefits paid to you as an unemployed member of a union from regular union dues are included in your income on Schedule 1 (Form 1040), line 8. However, if you contribute to a special union fund and your pay-ments to the fund aren’t deductible, the unem-ployment benefits you receive from the fund are includible in your income only to the extent they’re more than your contributions.

Guaranteed annual wage. Payments you re-ceive from your employer during periods of un-employment, under a union agreement that guarantees you full pay during the year, are tax-able as wages. Include them on line 1 of Form 1040 or 1040-SR.

State employees. Payments similar to a state's unemployment compensation may be

made by the state to its employees who aren’t covered by the state's unemployment compen-sation law. Although the payments are fully tax-able, don’t report them as unemployment com-pensation. Report these payments on Schedule 1 (Form 1040), line 8.

Welfare and Other

Public Assistance

Benefits

Don’t include in your income governmental ben-efit payments from a public welfare fund based upon need, such as payments to blind individu-als under a state public assistance law. Pay-ments from a state fund for the victims of crime shouldn’t be included in the victims' incomes if they’re in the nature of welfare payments. Don’t deduct medical expenses that are reimbursed by such a fund. You must include in your in-come any welfare payments that are compen-sation for services or that are obtained fraudu-lently.

Reemployment Trade Adjustment Assis-tance (RTAA) payments. RTAA payments received from a state 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 Schedule 1 (Form 1040), line 8.

Persons with disabilities. If you have a disa-bility, you must include in income compensation you receive for services you perform unless the compensation is otherwise excluded. However, you don’t include in income the value of goods, services, and cash that you receive, not in re-turn for your services, but for your training and rehabilitation because you have a disability. Ex-cludable amounts include payments for trans-portation and attendant care, such as inter-preter services for the deaf, reader services for the blind, and services to help individuals with an intellectual disability do their work.

Disaster relief grants. Don’t include post-dis-aster grants received under the Robert T. Staf-ford 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, per-sonal property, transportation, child care, or fu-neral expenses. Don’t deduct casualty losses or medical expenses that are specifically reim-bursed by these disaster relief grants. If you have deducted a casualty loss for the loss of your personal residence and you later receive a disaster relief grant for the loss of the same res-idence, you may have to include part or all of the grant in your taxable income. See Recover-ies, earlier. Unemployment assistance pay-ments under the Act are taxable unemployment compensation. See Unemployment compensa-tion under Unemployment Benefits, earlier.

Disaster relief payments. You can exclude from income any amount you receive that’s a qualified disaster relief payment. A qualified dis-aster relief payment is an amount paid to you:

1. To reimburse or pay reasonable and nec-essary personal, family, living, or funeral expenses that result from a qualified dis-aster;

2. To reimburse or pay reasonable and nec-essary expenses incurred for the repair or rehabilitation of your home or repair or re-placement of its contents to the extent it’s due to a qualified disaster;

3. By a person engaged in the furnishing or sale of transportation as a common carrier because of the death or personal physical injuries incurred as a result of a qualified disaster; or

4. By a federal, state, or local government, agency, or instrumentality in connection with a qualified disaster in order to pro-mote the general welfare.

You can exclude this amount only to the extent any expense it pays for isn’t paid for by insur-ance or otherwise. The exclusion doesn’t apply if you were a participant or conspirator in a ter-rorist action or a representative of one.

A qualified disaster is:

A disaster which results from a terrorist or military action;

A federally declared disaster; or

A disaster which results from an accident involving a common carrier, or from any other event, which is determined to be catastrophic by the Secretary of the Treas-ury or his or her delegate.

For amounts paid under item (4), a disaster is qualified if it’s determined by an applicable federal, state, or local authority to warrant assis-tance from the federal, state, or local govern-ment, agency, or instrumentality.

Disaster mitigation payments. You can ex-clude from income any amount you receive that’s a qualified disaster mitigation payment. Qualified disaster mitigation payments are 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 used to mitigate (reduce the se-verity of) potential damage from future natural disasters. They’re 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 can’t increase the basis or adjusted ba-sis of your property for improvements made with nontaxable disaster mitigation payments.

Home Affordable Modification Program (HAMP). If you benefit from Pay-for-Perform-ance Success Payments under HAMP, the pay-ments aren’t taxable.

Mortgage assistance payments under sec-tion 235 of the National Housing Act. Pay-ments made under section 235 of the National Housing Act for mortgage assistance aren’t in-cluded in the homeowner's income. Interest paid for the homeowner under the mortgage as-sistance program can’t be deducted.

Medicare. Medicare benefits received under ti-tle XVIII of the Social Security Act aren’t includi-ble in the gross income of the individuals for whom they’re paid. This includes basic (Part A (Hospital Insurance Benefits for the Aged)) and supplementary (Part B (Supplementary Medical Insurance Benefits for the Aged)).

Chapter 8Other IncomePage 71

Social security benefits (including lump-sum payments attributable to prior years), Supplemental Security Income (SSI) benefits, and lump-sum death benefits. The Social Security Administration (SSA) provides benefits such as old-age benefits, benefits to disabled workers, and benefits to spouses and dependents. These benefits may be subject to federal income tax depending on your filing sta-tus and other income. See chapter 7 in this pub-lication and Pub. 915, Social Security and Equivalent Railroad Retirement Benefits, for more information. An individual originally de-nied benefits, but later approved, may receive a lump-sum payment for the period when benefits were denied (which may be prior years). See Pub. 915 for information on how to make a lump-sum election, which may reduce your tax liability. There are also other types of benefits paid by the SSA. However, SSI benefits and lump-sum death benefits (one-time payment to spouse and children of deceased) aren’t sub-ject to federal income tax. For more information on these benefits, go to SSA.gov.

Nutrition Program for the Elderly. Food ben-efits you receive under the Nutrition Program for the Elderly aren’t taxable. If you prepare and serve free meals for the program, include in your income as wages the cash pay you re-ceive, even if you’re also eligible for food bene-fits.

Payments to reduce cost of winter energy. Payments made by a state to qualified people to reduce their cost of winter energy use aren’t taxable.

Other Income

The following brief discussions are arranged in alphabetical order. Other income items briefly discussed below are referenced to publications which provide more topical information.

Activity not for profit. You must include on your return income from an activity from which you don’t 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. En-ter this income on Schedule 1 (Form 1040), line 8. Deductions for expenses related to the activity are limited. They can’t 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 Pub. 535 for information on whether an activ-ity is considered carried on for a profit.

Alaska Permanent Fund dividend. If you re-ceived a payment from Alaska's mineral income fund (Alaska Permanent Fund dividend), report it as income on Schedule 1 (Form 1040), line 8. The state of Alaska sends each recipient a document that shows the amount of the pay-ment with the check. The amount is also repor-ted to the IRS.

Alimony. Include in your income on Schedule 1 (Form 1040), line 2a, any taxable alimony payments you receive. Amounts you receive for child support aren’t income to you. Alimony and child support payments are discussed in Pub. 504.

Page 72Chapter 8Other Income

Don’t include alimony payments you

receive under a divorce or separation CAUTION agreement (1) executed after 2018, or

executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification.

Bribes. If you receive a bribe, include it in your income.

Campaign contributions. These contribu-tions aren’t income to a candidate unless they’re diverted to his or her personal use. To be nontaxable, 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 con-tributed securities, and net gains realized on sales of contributed securities are taxable and must be reported on Form 1120-POL, U.S. In-come Tax Return for Certain Political Organiza-tions. Excess campaign funds transferred to an office account must be included in the office-holder's income on Schedule 1 (Form 1040), line 8, in the year transferred.

Car pools. Don’t 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 doesn’t apply if you have developed car pool arrange-ments into a profit-making business of trans-porting workers for hire.

Cash rebates. A cash rebate you receive from a dealer or manufacturer of an item you buy isn’t income, but you must reduce your basis by the amount of the rebate.

Example. You buy a new car for $24,000 cash and receive a $2,000 rebate check from the manufacturer. The $2,000 isn’t income to you. Your basis in the car is $22,000. This is the basis on which you figure gain or loss if you sell the car and depreciation if you use it for busi-ness.

Casualty insurance and other reimburse-ments. You generally shouldn’t report these reimbursements on your return unless you’re figuring gain or loss from the casualty or theft. See Pub. 547 for more information.

Child support payments. You shouldn’t re-port these payments on your return. See Pub. 504 for more information.

Court awards and damages. 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. The character of the income as ordi-nary income or capital gain depends on the na-ture of the underlying claim. Include the follow-ing as ordinary income.

1. Interest on any award.

2. Compensation for lost wages or lost profits in most cases.

3. Punitive damages, in most cases. It doesn’t matter if they relate to a physical injury or physical sickness.

4. Amounts received in settlement of pension rights (if you didn’t contribute to the plan).

5. Damages for:

a. Patent or copyright infringement,

b. Breach of contract, or

c. Interference with business operations.

6. Back pay and damages for emotional dis-tress received to satisfy a claim under title VII of the Civil Rights Act of 1964.

7. Attorney fees and costs (including contin-gent fees) where the underlying recovery is included in gross income.

8. Attorney fees and costs relating to whistle-blower awards where the underlying re-covery is included in gross income.

Don’t include in your income compensatory damages for personal physical injury or physi-cal sickness (whether received in a lump sum or installments).

Emotional distress. Emotional distress it-self isn’t 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. Don’t include them in your income.

If the emotional distress is due to a personal injury that isn’t due to a physical injury or sick-ness (for example, employment discrimination or injury to reputation), you must include the damages in your income, except for any dam-ages that aren’t more than amounts paid 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.

Credit card insurance. In most cases, 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 can’t make the payment due to injury, ill-ness, disability, or unemployment. Report on Schedule 1 (Form 1040), line 8, the amount of benefits you received during the year that’s more than the amount of the premiums you paid during the year.

Down payment assistance. If you purchase a home and receive assistance from a nonprofit corporation to make the down payment, that as-sistance isn’t included in your income. If the cor-poration qualifies as a tax-exempt charitable or-ganization, the assistance is treated as a gift and is included in your basis of the house. If the corporation doesn’t qualify, the assistance is treated as a rebate or reduction of the purchase price and isn’t included in your basis.

Employment agency fees. If you get a job through an employment agency, and the fee is paid by your employer, the fee isn’t includible in your income if you aren’t liable for it. However, if you pay it and your employer reimburses you for it, it’s includible in your income.

Energy conservation subsidies. You can ex-clude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy con-servation measure for a dwelling unit.

Energy conservation measure. This in-cludes installations or modifications that are

primarily designed to reduce consumption of electricity or natural gas, or improve the man-agement of energy demand.

Dwelling unit. This includes a house, apart-ment, condominium, mobile home, boat, or sim-ilar property. If a building or structure contains both dwelling and other units, any subsidy must be properly allocated.

Estate and trust income. An estate or trust, unlike a partnership, may have to pay federal in-come tax. If you’re a beneficiary of an estate or trust, you may be taxed on your share of its in-come distributed or required to be distributed to you. However, there is never a double tax. Es-tates 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).

Current income required to be distrib-uted. If you’re the beneficiary of an estate or trust that must distribute all of its current in-come, you must report your share of the distrib-utable net income, whether or not you actually received it.

Current income not required to be dis-tributed. If you’re the beneficiary of an estate or trust and the fiduciary has the choice of whether to distribute all or part of the current in-come, you must report:

All income that’s required to be distributed to you, whether or not it’s actually distrib-uted, plus

All other amounts actually paid or credited to you,

up to the amount of your share of distributable net income.

How to report. 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’re allowed on your individual income tax re-turn.

Losses. Losses of estates and trusts gener-ally aren’t deductible by the beneficiaries.

Grantor trust. Income earned by a grantor trust is taxable to the grantor, not the benefi-ciary, if the grantor keeps certain control over the trust. (The grantor is the one who transfer-red 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.

Expenses paid by another. 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 posi-tion you were in before the loss, the payment isn’t includible in your income.

Fees for services. Include all fees for your services in your income. Examples of these fees are amounts you receive for services you perform as:

A corporate director;

An executor, administrator, or personal representative of an estate;

A manager of a trade or business you op-erated before declaring chapter 11 bank-ruptcy;

A notary public; or

An election precinct official.

Nonemployee compensation. If you aren’t an employee and the fees for your services from a single payer in the course of the payer's trade or business total $600 or more for the year, the payer should send you a Form 1099-MISC. You may need to report your fees as self-employment income. See Self-Em-ployed Persons in chapter 1 for a discussion of when you’re considered self-employed.

Corporate director. Corporate director fees are self-employment income. Report these pay-ments on Schedule C (Form 1040).

Personal representatives. All personal representatives must include in their gross in-come fees paid to them from an estate. If you aren’t in the trade or business of being an exec-utor (for instance, you’re the executor of a friend's or relative's estate), report these fees on Schedule 1 (Form 1040), line 8. If you’re in the trade or business of being an executor, re-port these fees as self-employment income on Schedule C (Form 1040). The fee isn’t includi-ble in income if it’s waived.

Manager of trade or business for bank-ruptcy estate. Include in your income all pay-ments 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 Schedule 1 (Form 1040), line 8.

Notary public. Report payments for these services on Schedule C (Form 1040). These payments aren’t subject to self -employment tax. See the separate Instructions for Schedule SE (Form 1040) for details.

Election precinct official. You should re-ceive a Form W-2 showing payments for serv-ices performed as an election official or election worker. Report these payments on line 1 of Form 1040 or 1040-SR.

Foster care providers. Generally, payment you receive from a state, political subdivision, or a qualified foster care placement agency for caring for a qualified foster individual in your home is excluded from your income. However, you must include in your income payment to the extent it’s received for the care of more than five qualified foster individuals age 19 years or older.

A qualified foster individual is a person who:

1. Is living in a foster family home; and

2. Was placed there by:

a. An agency of a state or one of its polit-ical subdivisions, or

b. A qualified foster care placement agency.

Difficulty-of-care payments. These are payments that are designated by the payer as compensation for providing the additional care that’s required for physically, mentally, or emo-tionally handicapped qualified foster individuals. A state must determine that this compensation is needed, and the care for which the payments are made must be provided in the foster care provider's home in which the qualified foster in-dividual was placed.

Certain Medicaid waiver payments are trea-ted as difficulty-of-care payments when re-ceived by an individual care provider for caring for an eligible individual living in the provider's home. See Notice 2014-4, available at IRS.gov/irb/2014-4_IRB/ar06.html, and related questions and answers, available at IRS.gov/ Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income, for more information.

You must include in your income diffi-culty-of-care payments to the extent they’re re-ceived for more than:

10 qualified foster individuals under age 19, or

Five qualified foster individuals age 19 or older.

Maintaining space in home. If you’re paid to maintain space in your home for emergency foster care, you must include the payment in your income.

Reporting taxable payments. If you re-ceive payments that you must include in your income and you’re in business as a foster care provider, report the payments on Schedule C (Form 1040). See Pub. 587, Business Use of Your Home, to help you determine the amount you can deduct for the use of your home.

Found property. If you find and keep property that doesn’t belong to you that has been lost or abandoned (treasure trove), it’s taxable to you at its fair market value in the first year it’s your undisputed possession.

Free tour. If you received a free tour from a travel agency for organizing a group of tourists, you must include its value in your income. Re-port the fair market value of the tour on Sched-ule 1 (Form 1040), line 8, if you aren’t in the trade or business of organizing tours. You can’t deduct your expenses in serving as the volun-tary leader of the group at the group's request. If you organize tours as a trade or business, re-port the tour's value on Schedule C (Form 1040).

Gambling winnings. You must include your gambling winnings in income on Schedule 1 (Form 1040), line 8. If you itemize your deduc-tions on Schedule A (Form 1040), you can de-duct gambling losses you had during the year, but only up to the amount of your winnings. If you’re in the trade or business of gambling, use Schedule C (Form 1040).

Lotteries and raffles. Winnings from lotter-ies and raffles are gambling winnings. In addi-tion to cash winnings, you must include in your

Chapter 8Other IncomePage 73

income the fair market value of bonds, cars, houses, and other noncash prizes.

If you win a state lottery prize payable TIP in installments, see Pub. 525 for more

information.

Form W-2G. 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 Schedule 1 (Form 1040), line 8. In-clude the amount shown in box 4 on Form 1040 or 1040-SR, line 25c, as federal income tax withheld.

Reporting winnings and recordkeeping. For more information on reporting gambling winnings and recordkeeping, see Gambling Losses up to the Amount of Gambling Winnings in chapter 12.

Gifts and inheritances. In most cases, prop-erty you receive as a gift, bequest, or inheri-tance isn’t included in your income. However, if property you receive this way later produces in-come 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 taxa-ble to you.

Inherited pension or individual retire-ment arrangement (IRA). If you inherited a pension or an IRA, you may have to include part of the inherited amount in your income. See Survivors and Beneficiaries in Pub. 575 if you inherited a pension. See What if You Inherit an IRA? in Pubs. 590-A and 590-B if you inherited an IRA.

Hobby losses. Losses from a hobby aren’t de-ductible from other income. A hobby is an activ-ity from which you don’t expect to make a profit. See Activity not for profit, earlier.

If you collect stamps, coins, or other

items as a hobby for recreation and CAUTION pleasure, and you sell any of the items, your gain is taxable as a capital gain. (See Pub. 550, Investment Income and Expenses.) How-ever, if you sell items from your collection at a loss, you can’t deduct the loss.

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8, or on Schedule C (Form 1040) if from your self-employment activity.

Indian fishing rights. If you’re a member of a qualified Indian tribe that has fishing rights se-cured by treaty, executive order, or an Act of Congress as of March 17, 1988, don’t include in your income amounts you receive from activi-ties related to those fishing rights. The income isn’t subject to income tax, self-employment tax, or employment taxes.

Interest on frozen deposits. In general, you exclude from your income the amount of inter-est earned on a frozen deposit. See Interest in-come on frozen deposits. in chapter 6.

Interest on qualified savings bonds. You may be able to exclude from income the interest

Page 74Chapter 8Other Income

from qualified U.S. savings bonds you redeem if you pay qualified higher education expenses in the same year. For more information on this ex-clusion, see Education Savings Bond Program under U.S. Savings Bonds in chapter 6.

Job interview expenses. If a prospective em-ployer asks you to appear for an interview and either pays you an allowance or reimburses you for your transportation and other travel expen-ses, the amount you receive is generally not taxable. You include in income only the amount you receive that’s more than your actual expen-ses.

Jury duty. Jury duty pay you receive must be included in your income on Schedule 1 (Form 1040), line 8. If you gave any of your jury duty pay to your employer because your employer continued to pay you while you served jury duty, include the amount you gave your employer as an income adjustment on Schedule 1 (Form 1040), line 22, and see the instructions there.

Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Schedule 1 (Form 1040), line 8, or on Schedule C (Form 1040) if from your self-employment activity.

Example. You sell cars and help arrange car insurance for buyers. Insurance brokers pay back part of their commissions to you for refer-ring customers to them. You must include the kickbacks in your income.

Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). In most ca-ses, you don’t 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 qualified medical expenses, see Pub.

502. For more information about Archer MSAs or Medicare Advantage MSAs, see Pub. 969, Health Savings Accounts and Other Tax-Fa-vored Health Plans.

Prizes and awards. 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 Schedule 1 (Form 1040), line 8. If you refuse to accept a prize, don’t include its value in your income.

Prizes and awards in goods or services must be included in your income at their fair market value.

Employee awards or bonuses. Cash awards or bonuses given to you by your em-ployer for good work or suggestions must gen-erally be included in your income as wages. However, certain noncash employee achieve-ment awards can be excluded from income. See Bonuses and awards in chapter 5.

Pulitzer, Nobel, and similar prizes. If you were awarded a prize in recognition of accom-plishments in religious, charitable, scientific, ar-tistic, educational, literary, or civic fields, you must generally include the value of the prize in your income. However, you don’t include this

prize in your income if you meet all of the follow-ing requirements.

You were selected without any action on your part to enter the contest or proceed-ing.

You aren’t required to perform substantial future services as a condition to receiving the prize or award.

The prize or award is transferred by the payer directly to a governmental unit or tax-exempt charitable organization as des-ignated by you.

See Pub. 525 for more information about the conditions that apply to the transfer.

Qualified Opportunity Fund (QOF). Effective December 22, 2017, Code section 1400Z-2 provides a temporary deferral on inclusion in gross income for capital gains invested in QOFs, and permanent exclusion of capital gains from the sale or exchange of an invest-ment in the QOF if the investment is held for at least 10 years. See the Instructions for Form 8949 on how to report your election to defer eli-gible gains invested in a QOF. See the instruc-tions for Form 8997, Initial and Annual State-ment of Qualified Opportunity Fund (QOF) Investments, for reporting information. For addi-tional information, see Opportunity Zones Fre-quently Asked Questions at IRS.gov/ Newsroom/Opportunity-Zones-Frequently-Asked-Questions.

Qualified tuition programs (QTPs). A QTP (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 eligi-ble educational institution. A program can be established and maintained by a state, an agency or instrumentality of a state, or an eligi-ble educational institution.

The part of a distribution representing the amount paid or contributed to a QTP isn’t inclu-ded in income. This is a return of the investment in the program.

In most cases, the beneficiary doesn’t in-clude in income any earnings distributed from a QTP if the total distribution is less than or equal to adjusted qualified higher education expen-ses. See Pub. 970 for more information.

Railroad retirement annuities. The following types of payments are treated as pension or an-nuity income and are taxable under the rules explained in Pub. 575, Pension and Annuity In-come.

Tier 1 railroad retirement benefits that are more than the social security equivalent benefit.

Tier 2 benefits.

Vested dual benefits.

Rewards. If you receive a reward for providing information, include it in your income.

Sale of home. You may be able to exclude from income all or part of any gain from the sale or exchange of your main home. See Pub. 523.

Sale of personal items. If you sold an item you owned for personal use, such as a car, re-frigerator, furniture, stereo, jewelry, or silver-ware, your gain is taxable as a capital gain.

Report it as explained in the Instructions for Schedule D (Form 1040). You can’t deduct a loss.

However, if you sold an item you held for in-vestment, 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.

Example. You sold a painting on an online auction website for $100. You bought the paint-ing for $20 at a garage sale years ago. Report your gain as a capital gain as explained in the Instructions for Schedule D (Form 1040).

Scholarships and fellowships. A candidate for a degree can exclude amounts received as a qualified scholarship or fellowship. A qualified scholarship or fellowship is any amount you re-ceive that’s for:

Tuition and fees to enroll at or attend an educational institution; or

Fees, books, supplies, and equipment re-quired for courses at the educational insti-tution.

Amounts used for room and board don’t qualify for the exclusion. See Pub. 970 for more infor-mation on qualified scholarships and fellowship grants.

Payment for services. In most cases, you must include in income the part of any scholar-ship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candi-dates for a degree must perform the services to receive the degree.

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 Pub. 970.

Department of Veterans Affairs (VA) pay-ments. Allowances paid by the VA aren’t inclu-ded in your income. These allowances aren’t considered scholarship or fellowship grants.

Prizes. Scholarship prizes won in a contest aren’t scholarships or fellowships if you don’t have to use the prizes for educational purpo-ses. You must include these amounts in your in-come on Schedule 1 (Form 1040), line 8, whether or not you use the amounts for educa-tional purposes.

Sharing/gig economy. Generally, if you work in the gig economy or did gig work, you must in-clude all income received from all jobs whether you received a Form 1099-K, Payment Card and Third-Party Network Transactions, or not. See the Instructions for Schedule C (Form 1040) and the Instructions for Schedule SE (Form 1040).

Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.

Transporting school children. Don’t include in your income a school board mileage allow-ance for taking children to and from school if you aren’t in the business of taking children to school. You can’t deduct expenses for provid-ing this transportation.

Union benefits and dues. Amounts deducted from your pay for union dues, assessments, contributions, or other payments to a union can’t be excluded from your income.

Strike and lockout benefits. Benefits paid to you by a union as strike or lockout benefits, including both cash and the fair market value of other property, are usually included in your in-come 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.

Utility rebates. If you’re a customer of an elec-tric utility company and you participate in the utility's energy conservation program, you may receive on your monthly electric bill either:

A reduction in the purchase price of elec-tricity furnished to you (rate reduction), or

A nonrefundable credit against the pur-chase price of the electricity.

The amount of the rate reduction or nonrefund-able credit isn’t included in your income.

9.

Individual Retirement Arrangements (IRAs)

What’s New

Coronavirus distributions. Recent legisla-tion contains new rules that provide for tax-fa-vored withdrawals, income inclusion, and re-payments for individuals who were diagnosed with or suffered economic losses as a result of the coronavirus.

See Coronavirus Distributions in Pub. 590-B for more information.

Contribution deadline extension. The 2019 traditional and Roth IRA contribution deadline was extended to July 15, 2020.

Qualified disaster distributions. Special rules provide for tax-favored distributions from and repayments to certain retirement plans for taxpayers who suffered economic losses as a result of certain major disasters in tax years 2018, 2019, and 2020. For your 2020 return, these qualified disaster distributions are those in 2020 Form 8915-C, Qualified 2018 Disaster Retirement Plan Distributions and Repayments, and its instructions; 2020 Form 8915-D, Quali-fied 2019 Disaster Retirement Plan Distribu-tions and Repayments, and its instructions; and 2020 Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments, and its instructions.

Modified AGI limit for traditional IRA contri-butions. For 2020, if you are covered by a re-tirement plan at work, your deduction for contri-butions to a traditional IRA is reduced (phased out) if your modified AGI is:

More than $104,000 but less than $124,000 for a married couple filing a joint return or a qualifying widow(er),

More than $65,000 but less than $75,000 for a single individual or head of house-hold, or

Less than $10,000 for a married individual filing a separate return.

If you either live with your spouse or file a joint return, and your spouse is covered by a retire-ment plan at work but you aren’t, your deduc-tion is phased out if your modified AGI is more than $196,000 but less than $206,000. If your modified AGI is $206,000 or more, you can’t take a deduction for contributions to a tradi-tional IRA. See How Much Can You Deduct, later.

Modified AGI limit for Roth IRA contribu-tions. For 2020, your Roth IRA contribution limit is reduced (phased out) in the following sit-uations.

Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $196,000. You can’t make a Roth IRA contribution if your modified AGI is $206,000 or more.

Your filing status is single, head of house-hold, or married filing separately and you didn’t live with your spouse at any time in 2020 and your modified AGI is at least $124,000. You can’t make a Roth IRA con-tribution if your modified AGI is $139,000 or more.

Your filing status is married filing sepa-rately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You can’t make a Roth IRA contribution if your modified AGI is $10,000 or more.

See Can You Contribute to a Roth IRA, later.

2021 modified AGI limits. You can find infor-mation about the 2021 contribution and AGI lim-its in Pub. 590-A.

Reminders

Maximum age for making traditional IRA contributions repealed. For tax years begin-ning after 2019, there is no age limit on making contributions to your traditional IRA. For more information, see Pub. 590-A.

Required minimum distributions (RMDs). For distributions required to be made after tax year 2019, the age for the required beginning date for mandatory distributions is changed to age 72 for taxpayers reaching age 701/2 after 2019.

Contributions to both traditional and Roth IRAs. For information on your combined contri-bution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs, later.

Chapter 9Individual Retirement Arrangements (IRAs)Page 75

Extended rollover period for qualified plan loan offsets in 2018 or later. For distribu-tions made in tax years after tax year 2017, you have until the due date (including extensions) for your tax return for the tax year in which the offset occurs to rollover a qualified plan loan off-set amount. For more information, see Pub. 590-A.

No recharacterizations of conversions made in 2018 or later. A conversion of a tra-ditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made after tax year 2017, can’t be recharacter-ized as having been made to a traditional IRA. For more information, see Pub. 590-A.

Statement of required minimum distribu-tion. If a minimum distribution from your IRA is required, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the required minimum distribution to you, or offer to figure it for you. The report or offer must include the date by which the amount must be distributed. The report is due January 31 of the year in which the minimum distribution is required. It can be provided with the year-end fair market value statement that you normally get each year. No report is required for IRAs of owners who have died.

IRA interest. Although interest earned from your IRA is generally not taxed in the year earned, it isn't tax-exempt interest. Tax on your traditional IRA is generally deferred until you take a distribution. Don't report this interest on your tax return as tax-exempt interest.

Net investment income tax. For purposes of the Net Investment Income Tax (NIIT), net in-vestment income doesn't include distributions from a qualified retirement plan including IRAs (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). However, these distri-butions are taken into account when determin-ing the modified AGI threshold. Distributions from a nonqualified retirement plan are included in net investment income. See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more infor-mation.

Form 8606. To designate contributions as nondeductible, you must file Form 8606, Non-deductible IRAs.

The term “50 or older” is used several TIP times in this chapter. It refers to an IRA owner who is age 50 or older by the

end of the tax year.

Introduction

An IRA is a personal savings plan that gives you tax advantages for setting aside money for your retirement.

This chapter discusses the following topics.

The rules for a traditional IRA (any IRA that isn't a Roth or SIMPLE IRA).

The Roth IRA, which features nondeducti-ble contributions and tax-free distributions.

Simplified Employee Pensions (SEPs) and Savings Incentive Match Plans for Employees aren't discussed in this chapter. For more infor-mation on these plans and employees' SEP

IRAs and SIMPLE IRAs that are part of these plans, see Pub. 560, Retirement Plans for Small Business.

For information about contributions, deduc-tions, withdrawals, transfers, rollovers, and other transactions, see Pub. 590-A and Pub. 590-B.

Useful Items

You may want to see:

Publication

560 Retirement Plans for Small Business

575 Pension and Annuity Income

590-A Contributions to Individual Retirement Arrangements (IRAs)

590-B Distributions from Individual Retirement Arrangements (IRAs)

Form (and Instructions)

5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

8606 Nondeductible IRAs

For these and other useful items, go to IRS.gov/ Forms.

Traditional IRAs

In this chapter, the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA.” A traditional IRA is any IRA that isn't a Roth IRA or a SIMPLE IRA.Two advantages of a traditional IRA are:

You may be able to deduct some or all of your contributions to it, depending on your circumstances; and

Generally, amounts in your IRA, including earnings and gains, aren't taxed until they are distributed.

Who Can Open

a Traditional IRA?

You can open and make contributions to a tradi-tional IRA if you (or, if you file a joint return, your spouse) received taxable compensation during the year.

For tax years beginning after 2019, TIP there is no age limit on making contri-butions to your traditional IRA. For

more information, see Pub. 590-A.

What is compensation? Generally, compen-sation is what you earn from working. Compen-sation includes wages, salaries, tips, professio-nal fees, bonuses, and other amounts you receive for providing personal services. The IRS treats as compensation any amount prop-erly shown in box 1 (Wages, tips, other com-pensation) of Form W-2, Wage and Tax State-ment, provided that this amount is reduced by any amount properly shown in box 11 (Nonqua-lified plans).

Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2.

Compensation also includes commissions and taxable alimony and separate maintenance payments.

Self-employment income. If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal serv-ices are a material income-producing factor) re-duced by the total of:

The deduction for contributions made on your behalf to retirement plans, and

The deductible part of your self-employ-ment tax.

Compensation includes earnings from self-employment even if they aren't subject to self-employment tax because of your religious beliefs.

Nontaxable combat pay. For IRA purpo-ses, if you were a member of the U.S. Armed Forces, your compensation includes any non-taxable combat pay you receive.

What isn't compensation? Compensation doesn't include any of the following items.

Earnings and profits from property, such as rental income, interest income, and divi-dend income.

Pension or annuity income.

Deferred compensation received (compen-sation payments postponed from a past year).

Income from a partnership for which you don't provide services that are a material income-producing factor.

Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b.

Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.

When and How Can a Traditional IRA Be Opened?

You can open a traditional IRA at any time. However, the time for making contributions for any year is limited. See When Can Contribu-tions Be Made, later.

You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code require-ments.

Kinds of traditional IRAs. Your traditional IRA can be an individual retirement account or an-nuity. It can be part of either a SEP or an em-ployer or employee association trust account.

How Much Can Be Contributed?

There are limits and other rules that affect the amount that can be contributed to a traditional

Page 76Chapter 9Individual Retirement Arrangements (IRAs)

IRA. These limits and other rules are explained below.

Community property laws. Except as dis-cussed later under Kay Bailey Hutchison Spousal IRA limit, each spouse figures his or her limit separately, using his or her own com-pensation. This is the rule even in states with community property laws.

Brokers' commissions. Brokers' commis-sions paid in connection with your traditional IRA are subject to the contribution limit.

Trustees' fees. Trustees' administrative fees aren't subject to the contribution limit.

Qualified reservist repayments. If you are (or were) a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions you re-ceived. You can make these repayment contri-butions even if they would cause your total con-tributions to the IRA to be more than the general limit on contributions. To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or similar arrangement.

For more information, see Qualified reservist repayments under How Much Can Be Contrib-uted? in chapter 1 of Pub. 590-A.

Contributions on your behalf to a tradi-

tional IRA reduce your limit for contri-CAUTION butions to a Roth IRA. (See Roth IRAs, later.)

General limit. For 2020, the most that can be contributed to your traditional IRA is generally the smaller of the following amounts.

$6,000 ($7,000 if you are 50 or older).

Your taxable compensation (defined ear-lier) for the year.

This is the most that can be contributed regard-less of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. (See Non-deductible Contributions, later.) Qualified re-servist repayments don't affect this limit.

Example 1. Betty, who is 34 years old and single, earned $24,000 in 2020. Her IRA contri-butions for 2020 are limited to $6,000.

Example 2. John, an unmarried college student working part time, earned $3,500 in 2020. His IRA contributions for 2020 are limited to $3,500, the amount of his compensation.

Kay Bailey Hutchison Spousal IRA limit. For 2020, if you file a joint return and your taxa-ble compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following amounts.

1. $6,000 ($7,000 if you are 50 or older).

2. The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts.

a. Your spouse's IRA contribution for the year to a traditional IRA.

b. Any contribution for the year to a Roth IRA on behalf of your spouse.

This means that the total combined contribu-tions that can be made for the year to your IRA and your spouse's IRA can be as much as $12,000 ($13,000 if only one of you is 50 or older, or $14,000 if both of you are 50 or older).

When Can Contributions Be Made?

As soon as you open your traditional IRA, con-tributions can be made to it through your chosen sponsor (trustee or other administrator). Contributions must be in the form of money (cash, check, or money order). Property can't be contributed.

Contributions must be made by due date. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions.

Designating year for which contribution is made. If an amount is contributed to your tradi-tional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. If you don't tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it).

Filing before a contribution is made. You can file your return claiming a traditional IRA contribution before the contribution is actually made. Generally, the contribution must be made by the due date of your return, not includ-ing extensions.

Contributions not required. You don't have to contribute to your traditional IRA for every tax year, even if you can.

How Much Can You Deduct?

Generally, you can deduct the lesser of:

The contributions to your traditional IRA for the year, or

The general limit (or the Kay Bailey Hutchi-son Spousal IRA limit, if it applies).

However, if you or your spouse were covered by an employer retirement plan, you may not be able to deduct this amount. See Limit if Covered by Employer Plan, later.

You may be able to claim a credit for TIP contributions to your traditional IRA.

For more information, see chapter 3 of Pub. 590-A.

Trustees' fees. Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA aren't deductible as IRA contributions. You are also not able to de-duct these fees as an itemized deduction.

Brokers' commissions. Brokers' commis-sions are part of your IRA contribution and, as such, are deductible subject to the limits.

Full deduction. If neither you nor your spouse was covered for any part of the year by an em-ployer retirement plan, you can take a deduc-tion for total contributions to one or more tradi-tional IRAs of up to the lesser of:

$6,000 ($7,000 if you are age 50 or older in 2020), or

100% of your compensation.

This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf.

Kay Bailey Hutchison Spousal IRA. In the case of a married couple with unequal compen-sation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of the following amounts.

1. $6,000 ($7,000 if the spouse with the lower compensation is age 50 or older in 2020).

2. The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts.

a. The IRA deduction for the year of the spouse with the greater compensa-tion.

b. Any designated nondeductible contri-bution for the year made on behalf of the spouse with the greater compen-sation.

c. Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation.

This limit is reduced by any contributions to a 501(c)(18) plan on behalf of the spouse with the lesser compensation.

Note. If you were divorced or legally sepa-rated (and didn't remarry) before the end of the year, you can't deduct any contributions to your spouse's IRA. After a divorce or legal separa-tion, you can deduct only contributions to your own IRA. Your deductions are subject to the rules for single individuals.

Covered by an employer retirement plan. If you or your spouse was covered by an em-ployer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. This is dis-cussed later under Limit if Covered by Em-ployer Plan. Limits on the amount you can de-duct don't affect the amount that can be contributed. See Nondeductible Contributions, later.

Are You Covered by an Employer Plan?

The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. The “Retirement plan” box should be checked if you were covered.

Reservists and volunteer firefighters should also see Situations in Which You Aren’t Cov-ered by an Employer Plan, later.

Chapter 9Individual Retirement Arrangements (IRAs)Page 77

Table 9-1. Effect of Modified AGI1 on Deduction if You Are Covered by Retirement Plan at Work

If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction.

IF your filing status is...	AND your modified AGI is...	THEN you can take...
Single	$65,000 or less	a full deduction.
or	more than $65,000	a partial deduction.
	but less than $75,000

Head of household	$75,000 or more	no deduction.
Married filing jointly	$104,000 or less	a full deduction.
or	more than $104,000	a partial deduction.
	but less than $124,000

Qualifying widow(er)	$124,000 or more	no deduction.
Married filing	less than $10,000	a partial deduction.
separately2
	$10,000 or more	no deduction.

Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI), later.

If you didn't live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” column).

Volunteer firefighters. If the only reason you participate in a plan is because you are a volun-teer firefighter, you may not be covered by the plan. You aren't covered by the plan if both of the following conditions are met.

1. The plan you participate in is established for its employees by:

a. The United States,

b. A state or political subdivision of a state, or

c. An instrumentality of either (a) or (b) above.

2. Your accrued retirement benefits at the beginning of the year won't provide more than $1,800 per year at retirement.

Limit if Covered by Employer Plan

If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no de-duction at all, depending on your income and your filing status.

Your deduction begins to decrease (phase out) when your income rises above a certain

If you aren't certain whether you were cov-ered by your employer's retirement plan, you should ask your employer.

Federal judges. For purposes of the IRA de-duction, federal judges are covered by an em-ployer retirement plan.

For Which Year(s) Are You Covered?

Special rules apply to determine the tax years for which you are covered by an employer plan. These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan.

Tax year. Your tax year is the annual account-ing period you use to keep records and report income and expenses on your income tax re-turn. For almost all people, the tax year is the calendar year.

Defined contribution plan. Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year.

A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Types of defined contribu-tion plans include profit-sharing plans, stock bo-nus plans, and money purchase pension plans. For additional information, see Pub. 590-A.

Defined benefit plan. If you are eligible to par-ticipate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. This rule applies even if you:

Declined to participate in the plan,

Didn't make a required contribution, or

Didn't perform the minimum service re-quired to accrue a benefit for the year.

A defined benefit plan is any plan that isn't a defined contribution plan. In a defined benefit

plan, the level of benefits to be provided to each participant is spelled out in the plan. The plan administrator figures the amount needed to pro-vide those benefits and those amounts are con-tributed to the plan. Defined benefit plans in-clude pension plans and annuity plans.

No vested interest. If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual.

Situations in Which You Aren’t Covered

Unless you are covered under another em-ployer plan, you aren't covered by an employer plan if you are in one of the situations described below.

Social security or railroad retirement. Cov-erage under social security or railroad retire-ment isn't coverage under an employer retire-ment plan.

Benefits from a previous employer's plan. If you receive retirement benefits from a previous employer's plan, you aren't covered by that plan.

Reservists. If the only reason you participate in a plan is because you are a member of a re-serve unit of the U.S. Armed Forces, you may not be covered by the plan. You aren't covered by the plan if both of the following conditions are met.

1. The plan you participate in is established for its employees by:

a. The United States,

b. A state or political subdivision of a state, or

c. An instrumentality of either (a) or (b) above.

2. You didn't serve more than 90 days on ac-tive duty during the year (not counting duty for training).

amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status.

To determine if your deduction is subject to phaseout, you must determine your modified AGI and your filing status. See Filing status and Modified adjusted gross income (AGI), later. Then use Table 9-1 or Table 9-2 to determine if the phaseout applies.

Social security recipients. Instead of using Table 9-1 or Table 9-2, use the worksheets in Appendix B of Pub. 590-A if, for the year, all of the following apply.

You received social security benefits.

You received taxable compensation.

Contributions were made to your traditional IRA.

You or your spouse was covered by an employer retirement plan.

Use those worksheets to figure your IRA deduc-tion, your nondeductible contribution, and the taxable portion, if any, of your social security benefits.

Deduction phaseout. If you are covered by an employer retirement plan and you didn't receive any social security retirement benefits, your IRA deduction may be reduced or eliminated de-pending on your filing status and modified AGI as shown in Table 9-1.

If your spouse is covered. If you aren't covered by an employer retirement plan, but your spouse is, and you didn't receive any so-cial security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 9-2.

Filing status. Your filing status depends pri-marily on your marital status. For this purpose, you need to know if your filing status is single or head of household, married filing jointly or quali-fying widow(er), or married filing separately. If

Page 78Chapter 9Individual Retirement Arrangements (IRAs)

Table 9-2. Effect of Modified AGI1 on Deduction if You Aren’t Covered by Retirement Plan at Work

If you aren't covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction.

IF your filing status is...	AND your modified AGI is...	THEN you can take...
Single,	any amount	a full deduction.
Head of household, or
Qualifying widow(er)
Married filing jointly or	any amount	a full deduction.
separately with a spouse who
*isn't* covered by a plan at work
Married filing jointly with a	$196,000 or less	a full deduction.
spouse who is covered by a plan
	more than $196,000	a partial deduction.
at work
	but less than $206,000

	$206,000 or more	no deduction.
Married filing separately with a	less than $10,000	a partial deduction.
spouse who is covered by a plan
	$10,000 or more	no deduction.
at work2

Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI), later.

You are entitled to the full deduction if you didn't live with your spouse at any time during the year.

you need more information on filing status, see		and you file a separate return, your filing status,
chapter 2.		for this purpose, is single.

*Lived apart from spouse.* If you didn't live
with your spouse at any time during the year

Modified adjusted gross income (AGI). You may be able to use Worksheet 9-1 to figure your modified AGI. However, if you made contribu-tions to your IRA for 2020 and received a distri-bution from your IRA in 2020, see Pub. 590-A.

Don't assume that your modified AGI is

the same as your compensation. Your CAUTION modified AGI may include income in addition to your compensation (discussed ear-lier), such as interest, dividends, and income from IRA distributions.

When filing Form 1040 or 1040-SR, refigure the AGI amount on line 11 without taking into account any of the following amounts.

IRA deduction.

Student loan interest deduction.

Tuition and fees deduction.

Foreign earned income exclusion.

Foreign housing exclusion or deduction.

Exclusion of qualified savings bond inter-est shown on Form 8815, Exclusion of In-terest From Series EE and I U.S. Savings Bonds Issued After 1989.

Exclusion of employer-provided adoption benefits shown on Form 8839, Qualified Adoption Expenses.

This is your modified AGI.

Chapter 9Individual Retirement Arrangements (IRAs)Page 79

Worksheet 9-1. Figuring Your Modified AGI

Keep for Your Records

Use this worksheet to figure your modified adjusted gross income for traditional IRA purposes.

1.	Enter your adjusted gross income (AGI) from Form 1040 or 1040-SR, line 11, figured without taking into	1.
	account the amount from Schedule 1 (Form 1040), line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.	Enter any student loan interest deduction from Schedule 1 (Form 1040), line 20 . . . . . . . . . . . . . . . . . . . .	2.
3.	Enter any foreign earned income and/or housing exclusion from Form 2555, line 45 . . . . . . . . . . . . . . . . .	3.
4.	Enter any foreign housing deduction from Form 2555, line 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4.
5.	Enter any excludable savings bond interest from Form 8815, line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5.
6.	Enter any excluded employer-provided adoption benefits from Form 8839, line 28 . . . . . . . . . . . . . . . . . .	6.
7.	Enter any tuition and fees deduction from Schedule 1 (Form 1040), line 21 . . . . . . . . . . . . . . . . . . . . . . . .	7.
8.	Add lines 1 through 7. This is your modified AGI for traditional IRA purposes . . . . . . . . . . . . . . . . . . . . . .	8.

Both contributions for 2020 and distribu-tions in 2020. If all three of the following apply, any IRA distributions you received in 2020 may be partly tax free and partly taxable.

You received distributions in 2020 from one or more traditional IRAs.

You made contributions to a traditional IRA for 2020.

Some of those contributions may be non-deductible contributions.

If this is your situation, you must figure the taxa-ble part of the traditional IRA distribution before you can figure your modified AGI. To do this, you can use Worksheet 1-1 in Pub. 590-B.

If at least one of the above doesn't apply, figure your modified AGI using Worksheet 9-1.

How to figure your reduced IRA deduction. You can figure your reduced IRA deduction for Form 1040 or 1040-SR by using the worksheets in chapter 1 of Pub. 590-A. Also, the Instruc-tions for Forms 1040 and 1040-SR include simi-lar worksheets that you may be able to use in-stead.

Reporting Deductible Contributions

When filing Form 1040 or 1040-SR, enter your IRA deduction on Schedule 1 (Form 1040), line 19.

Nondeductible Contributions

Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. The difference between your total permitted contributions and your IRA de-duction, if any, is your nondeductible contribu-tion.

Example. Mike is 30 years old and single. In 2020, he was covered by a retirement plan at work. His salary was $67,000. His modified AGI was $80,000. Mike made a $6,000 IRA contri-bution for 2020. Because he was covered by a retirement plan and his modified AGI was over $74,000, he can't deduct his $6,000 IRA contri-bution. He must designate this contribution as a

nondeductible contribution by reporting it on Form 8606, as explained next.

Form 8606. To designate contributions as nondeductible, you must file Form 8606.

You don't have to designate a contribution as nondeductible until you file your tax return. When you file, you can even designate other-wise deductible contributions as nondeductible.

You must file Form 8606 to report nonde-ductible contributions even if you don't have to file a tax return for the year.

A Form 8606 isn't used for the year that

you make a rollover from a qualified re-CAUTION tirement plan to a traditional IRA and the rollover includes nontaxable amounts. In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. See Form 8606 under Distributions Fully or Partly Taxable, later.

Failure to report nondeductible contribu-tions. If you don't report nondeductible contri-butions, all of the contributions to your tradi-tional IRA will be treated as deductible contributions when withdrawn. All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nonde-ductible contributions were made.

Penalty for overstatement. If you over-state the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause.

Penalty for failure to file Form 8606. You will have to pay a $50 penalty if you don't file a required Form 8606, unless you can prove that the failure was due to reasonable cause.

Tax on earnings on nondeductible contri-butions. As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeduc-tible) will be taxed until they are distributed. See When Can You Withdraw or Use IRA Assets, later.

Cost basis. You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeducti-ble contributions.

Inherited IRAs

If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross in-come any taxable distributions they receive.

Inherited from spouse. If you inherit a tradi-tional IRA from your spouse, you generally have the following three choices. You can do one of the following.

1. Treat it as your own IRA by designating yourself as the account owner.

2. Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a:

a. Qualified employer plan,

b. Qualified employee annuity plan (sec-tion 403(a) plan),

c. Tax-sheltered annuity plan (section 403(b) plan), or

d. Deferred compensation plan of a state or local government (section 457 plan).

3. Treat yourself as the beneficiary rather than treating the IRA as your own.

Treating it as your own. You will be con-sidered to have chosen to treat the IRA as your own if:

Contributions (including rollover contribu-tions) are made to the inherited IRA, or

You don't take the required minimum distri-bution for a year as a beneficiary of the IRA.

You will only be considered to have chosen to treat the IRA as your own if:

You are the sole beneficiary of the IRA, and

You have an unlimited right to withdraw amounts from it.

However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution isn't a required distribution, even if you aren't the sole beneficiary of your deceased spouse's IRA.

Page 80Chapter 9Individual Retirement Arrangements (IRAs)

Inherited from someone other than spouse. If you inherit a traditional IRA from anyone other than your deceased spouse, you can't treat the inherited IRA as your own. This means that you can't make any contributions to the IRA. It also means you can't roll over any amounts into or out of the inherited IRA. However, you can make a trustee -to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary.

For more information, see the discussion of Inherited IRAs under Rollover From One IRA Into Another, later.

Can You Move Retirement Plan Assets?

You can transfer, tax free, assets (money or property) from other retirement plans (including traditional IRAs) to a traditional IRA. You can make the following kinds of transfers.

Transfers from one trustee to another.

Rollovers.

Transfers incident to a divorce.

Transfers to Roth IRAs. Under certain condi-tions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. You can also move assets from a qualified retirement plan to a Roth IRA. See Can You Move Amounts Into a Roth IRA? under Roth IRAs, later.

Trustee-to-Trustee Transfer

A transfer of funds in your traditional IRA from one trustee directly to another, either at your re-quest or at the trustee's request, isn't a rollover. This includes the situation where the current trustee issues a check to the new trustee, but gives it to you to deposit. Because there is no distribution to you, the transfer is tax free. Be-cause it isn't a rollover, it isn't affected by the 1-year waiting period required between roll-overs, discussed later under Rollover From One IRA Into Another. For information about direct transfers to IRAs from retirement plans other than IRAs, see Can You Move Retirement Plan Assets? in chapter 1 and Can You Move Amounts Into a Roth IRA? in chapter 2 of Pub. 590-A.

Rollovers

Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute (roll over) to another re-tirement plan. The contribution to the second retirement plan is called a “rollover contribu-tion.”

Note. An amount rolled over tax free from one retirement plan to another is generally in-cludible in income when it is distributed from the second plan.

Kinds of rollovers to a traditional IRA. You can roll over amounts from the following plans into a traditional IRA.

A traditional IRA.

An employer's qualified retirement plan for its employees.

A deferred compensation plan of a state or local government (section 457 plan).

A tax-sheltered annuity plan (section 403(b) plan).

Treatment of rollovers. You can't deduct a rollover contribution, but you must report the rollover distribution on your tax return as dis-cussed later under Reporting rollovers from IRAs and Reporting rollovers from employer plans.

Rollover notice. A written explanation of rollover treatment must be given to you by the plan (other than an IRA) making the distribution. See Written explanation to recipients in Pub. 590-A.

Kinds of rollovers from a traditional IRA. You may be able to roll over, tax free, a distribu-tion from your traditional IRA into a qualified plan. These plans include the federal Thrift Sav-ings Plan (for federal employees), deferred compensation plans of state or local govern-ments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Qualified plans may, but aren't required to, accept such rollovers.

Time limit for making a rollover contribu-tion. You must generally make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer's plan.

The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Pub. 590-A.

Extension of rollover period. If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period al-lowed for a rollover, special rules extend the rollover period. For more information, see Can You Move Retirement Plan Assets? in chapter 1 of Pub. 590-A.

Rollover From One IRA Into Another

You can withdraw, tax free, all or part of the as-sets from one traditional IRA if you reinvest them within 60 days in the same or another tra-ditional IRA. Because this is a rollover, you can't deduct the amount that you reinvest in an IRA.

Waiting period between rollovers. Gener-ally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you can't, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA. You also can't make a tax-free rollover of any amount distributed, within the same 1-year pe-riod, from the IRA into which you made the tax-free rollover.

The 1-year period begins on the date you re-ceive the IRA distribution, not on the date you roll it over into an IRA. Rules apply to the num-ber of rollovers you can have with your tradi-tional IRAs. See Application of one-rollover limi-tation next.

Application of one-rollover limitation. You can make only one rollover from an IRA to an-other (or the same) IRA in any 1-year period, re-gardless of the number of IRAs you own. The limit applies by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs, as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. How-ever, trustee-to-trustee transfers between IRAs aren't limited and rollovers from traditional IRAs to Roth IRAs (conversions) aren't limited.

Example. John has three traditional IRAs: IRA-1, IRA-2, and IRA-3. John didn't take any distributions from his IRAs in 2020. On January 1, 2021, John took a distribution from IRA-1 and rolled it over into IRA-2 on the same day. For 2021, John can't roll over any other 2020 IRA distribution, including a rollover distribution in-volving IRA-3. This wouldn’t apply to a trustee-to-trustee transfer or a Roth IRA conver-sion.

Partial rollovers. If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of it. The amount you keep will generally be taxable (ex-cept for the part that is a return of nondeductible contributions). The amount you keep may be subject to the 10% additional tax on early distri-butions, discussed later under What Acts Re-sult in Penalties or Additional Taxes.

Required distributions. Amounts that must be distributed during a particular year under the required minimum distribution rules (discussed later) aren't eligible for rollover treatment.

Inherited IRAs. If you inherit a traditional IRA from your spouse, you can generally roll it over, or you can choose to make the inherited IRA your own. See Treating it as your own, earlier.

Not inherited from spouse. If you inherit a traditional IRA from someone other than your spouse, you can't roll it over or allow it to re-ceive a rollover contribution. You must withdraw the IRA assets within a certain period. For more information, see When Must You Withdraw As-sets? (Required Minimum Distributions) in chapter 1 of Pub. 590-B.

Reporting rollovers from IRAs. Report any rollover from one traditional IRA to the same or another traditional IRA on Form 1040 or 1040-SR as follows.

Enter the total amount of the distribution on Form 1040 or 1040-SR, line 4a. If the total amount on Form 1040 or 1040-SR, line 4a, was rolled over, enter zero on Form 1040 or 1040-SR, line 4b. If the total distribution wasn't rolled over, enter the taxable portion of the part that wasn't rolled over on Form 1040 or 1040 -SR, line 4b. Enter “Rollover” next to Form 1040 or 1040-SR, line 4b. For more information, see the Instructions for Forms 1040 and 1040-SR.

If you rolled over the distribution into a quali-fied plan (other than an IRA) or you make the

Chapter 9Individual Retirement Arrangements (IRAs)Page 81

rollover in 2021, attach a statement explaining what you did.

Rollover From Employer's Plan Into an IRA

You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's):

Employer's qualified pension, profit-shar-ing, or stock bonus plan;

Annuity plan;

Tax-sheltered annuity plan (section 403(b) plan); or

Governmental deferred compensation plan (section 457 plan).

A qualified plan is one that meets the re-quirements of the Internal Revenue Code.

Eligible rollover distribution. Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a quali-fied retirement plan except the following.

1. A required minimum distribution (ex-plained later under When Must You With-draw IRA Assets? (Required Minimum Distributions)).

2. A hardship distribution.

3. Any of a series of substantially equal peri-odic distributions paid at least once a year over:

a. Your lifetime or life expectancy,

b. The lifetimes or life expectancies of you and your beneficiary, or

c. A period of 10 years or more.

4. Corrective distributions of excess contri-butions or excess deferrals, and any in-come allocable to the excess, or of excess annual additions and any allocable gains.

5. A loan treated as a distribution because it doesn't satisfy certain requirements either when made or later (such as upon de-fault), unless the participant's accrued benefits are reduced (offset) to repay the loan. For more information, see Plan loan offsets under Time Limit for Making a Roll-over Contribution in Pub. 590-A.

6. Dividends on employer securities.

7. The cost of life insurance coverage.

Your rollover into a traditional IRA may in-clude both amounts that would be taxable and amounts that wouldn’t be taxable if they were distributed to you, but not rolled over. To the ex-tent the distribution is rolled over into a tradi-tional IRA, it isn’t includible in your income.

Any nontaxable amounts that you roll TIP over into your traditional IRA become part of your basis (cost) in your IRAs.

To recover your basis when you take distribu-tions from your IRA, you must complete Form 8606 for the year of the distribution. See Form 8606 under Distributions Fully or Partly Taxa-ble, later.

Rollover by nonspouse beneficiary. A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; an-

nuity plan; tax-sheltered annuity (section 403(b)) plan; or governmental deferred com-pensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. The IRA is treated as an inherited IRA. For more information about inherited IRAs, see Inherited IRAs, earlier.

Reporting rollovers from employer plans. Enter the total distribution (before income tax or other deductions were withheld) on Form 1040 or 1040-SR, line 4a. This amount should be shown in box 1 of Form 1099-R. From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxa-ble to you when made. From that result, sub-tract the amount that was rolled over either di-rectly or within 60 days of receiving the distribution. Enter the remaining amount, even if zero, on Form 1040 or 1040-SR, line 4b. Also, enter "Rollover" next to Form 1040 or 1040-SR, line 4b.

Transfers Incident to Divorce

If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free. For detailed information, see Distribu-tions under divorce or similar proceedings (al-ternate payees) under Rollover From Employ-er's Plan Into an IRA in Pub. 590-A.

Converting From Any Traditional IRA to a Roth IRA

Allowable conversions. You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. The amount that you withdraw and timely con-tribute (convert) to the Roth IRA is called a con-version contribution. If properly (and timely) rol-led over, the 10% additional tax on early distributions won't apply. However, a part or all of the conversion contribution from your tradi-tional IRA is included in your gross income.

Required distributions. You can't convert amounts that must be distributed from your tra-ditional IRA for a particular year (including the calendar year in which you reach age 72 under the required minimum distribution rules (dis-cussed later)).

Income. You must include in your gross in-come distributions from a traditional IRA that you would have had to include in income if you hadn't converted them into a Roth IRA. These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA.

You don't include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed later.

You must file Form 8606 to report 2020 con-versions from traditional, SEP, or SIMPLE IRAs to a Roth IRA in 2020 (unless you recharacter-ized the entire amount) and to figure the amount to include in income.

If you must include any amount in your gross income, you may have to increase your with-holding or make estimated tax payments. See chapter 4.

Recharacterizations

You may be able to treat a contribution made to one type of IRA as having been made to a dif-ferent type of IRA. This is called recharacteriz-ing the contribution. See Can You Move Retire-ment Plan Assets? in chapter 1 of Pub. 590-A for more detailed information.

How to recharacterize a contribution. To re-characterize a contribution, you must generally have the contribution transferred from the first IRA (the one to which it was made) to the sec-ond IRA in a trustee-to-trustee transfer. If the transfer is made by the due date (including ex-tensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been origi-nally made to the second IRA instead of to the first IRA. If you recharacterize your contribution, you must do all three of the following.

Include in the transfer any net income allo-cable to the contribution. If there was a loss, the net income you must transfer may be a negative amount.

Report the recharacterization on your tax return for the year during which the contri-bution was made.

Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA.

No recharacterizations of conversions made in 2018 or later. A conversion of a tradi-tional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made in tax years beginning after tax year 2017, can’t be recharacterized as having been made to a traditional IRA. If you made a conver-sion in the 2017 tax year, you had until the due date (with extensions) for filing the return for that tax year to recharacterize it.

No deduction allowed. You can't deduct the contribution to the first IRA. Any net income you transfer with the recharacterized contribution is treated as earned in the second IRA.

How do you recharacterize a contribution? To recharacterize a contribution, you must no-tify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. You must make the notifications by the date of the transfer. Only one notification is required if both IRAs are maintained by the same trustee. The notification(s) must include all of the follow-ing information.

The type and amount of the contribution to the first IRA that is to be recharacterized.

The date on which the contribution was made to the first IRA and the year for which it was made.

A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the

Page 82Chapter 9Individual Retirement Arrangements (IRAs)

amount of the contribution and any net in-come (or loss) allocable to the contribution to the trustee of the second IRA.

The name of the trustee of the first IRA and the name of the trustee of the second IRA.

Any additional information needed to make the transfer.

Reporting a recharacterization. If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. You must treat the contribution as having been made to the second IRA.

When Can You Withdraw or Use IRA Assets?

There are rules limiting use of your IRA assets and distributions from it. Violation of the rules generally results in additional taxes in the year of violation. See What Acts Result in Penalties or Additional Taxes, later.

Contributions returned before the due date of return. If you made IRA contributions in 2020, you can withdraw them tax free by the due date of your return. If you have an exten-sion of time to file your return, you can withdraw them tax free by the extended due date. You can do this if, for each contribution you with-draw, both of the following conditions apply.

You didn't take a deduction for the contri-bution.

You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while it was in the IRA when figuring the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount.

Note. To figure the amount you must with-draw, see Worksheet 1-4 under When Can You Withdraw or Use Assets? in chapter 1 of Pub. 590-A.

Earnings includible in income. You must include in income any earnings on the contribu-tions you withdraw. Include the earnings in in-come for the year in which you made the contri-butions, not in the year in which you withdraw them.

Generally, except for any part of a with-

drawal that is a return of nondeductible CAUTION contributions (basis), any withdrawal of your contributions after the due date (or exten-ded due date) of your return will be treated as a taxable distribution. Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes, later.

Early distributions tax. The 10% additional tax on distributions made before you reach age 591/2 doesn't apply to these tax-free withdraw-als of your contributions. However, the distribu-tion of interest or other income must be repor-ted on Form 5329 and, unless the distribution qualifies as an exception to the age 59 1/2 rule, it will be subject to this tax. See Early Distribu-

tions under What Acts Result in Penalties or Additional Taxes in Pub. 590-B.

When Must You Withdraw IRA Assets? (Required Minimum Distributions)

You can't keep funds in a traditional IRA indefi-nitely. Eventually, they must be distributed. If there are no distributions, or if the distributions aren't large enough, you may have to pay a 50% excise tax on the amount not distributed as required. See Excess Accumulations (Insuffi-cient Distributions), later. The requirements for distributing IRA funds differ depending on whether you are the IRA owner or the benefi-ciary of a decedent's IRA.

Required minimum distribution. The amount that must be distributed each year is referred to as the required minimum distribution.

Distributions not eligible for rollover. Amounts that must be distributed (required min-imum distributions) during a particular year aren't eligible for rollover treatment.

IRA owners. If you are the owner of a tradi-tional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 72. April 1 of the year following the year in which you reach age 72 is referred to as the “required beginning date.”

Distributions by the required beginning date. You must receive at least a minimum amount for each year starting with the year you reach age 72. If you don't (or didn't) receive that minimum amount in the year you become age 72, then you must receive distributions for the year you become age 72 by April 1 of the next year.

If an IRA owner dies after reaching age 72, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date.

Even if you begin receiving distribu-

tions before you attain age 72, you CAUTION must begin figuring and receiving re-quired minimum distributions by your required beginning date.

Distributions after the required beginning date. The required minimum distribution for any year after the year you turn age 72 must be made by December 31 of that later year.

Beneficiaries. If you are the beneficiary of a decedent's traditional IRA, the requirements for distributions from that IRA generally depend on whether the IRA owner died before or after the required beginning date for distributions.

More information. For more information, in-cluding how to figure your minimum required distribution each year and how to figure your re-quired distribution if you are a beneficiary of a decedent's IRA, see When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1 of Pub. 590-B.

Are Distributions Taxable?

In general, distributions from a traditional IRA are taxable in the year you receive them.

Exceptions. Exceptions to distributions from traditional IRAs being taxable in the year you re-ceive them are:

Rollovers;

Qualified charitable distributions (QCDs), discussed later;

Tax-free withdrawals of contributions, dis-cussed earlier; and

The return of nondeductible contributions, discussed later under Distributions Fully or Partly Taxable.

Although a conversion of a traditional

IRA is considered a rollover for Roth CAUTION IRA purposes, it isn't an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Con-version distributions are includible in your gross income subject to this rule and the special rules for conversions explained in Converting From Any Traditional IRA Into a Roth IRA under Can You Move Retirement Plan Assets? in chapter 1 of Pub. 590-A.

Qualified charitable distributions (QCDs). A QCD is generally a nontaxable distribution made directly by the trustee of your IRA to an organization eligible to receive tax deductible contributions. See Qualified Charitable Distribu-tions in Pub. 590-B for more information.

A QCD will count towards your mini-TIP mum required distribution. See Quali-fied charitable distributions under Are Distributions Taxable? in chapter 1 of Pub.

590-B for more information.

Ordinary income. Distributions from tradi-tional IRAs that you include in income are taxed as ordinary income.

No special treatment. In figuring your tax, you can't use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans.

Distributions Fully or Partly Taxable

Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contribu-tions.

Fully taxable. If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Because you have no basis in your IRA, any distributions are fully taxable when re-ceived. See Reporting taxable distributions on your return, later.

Partly taxable. If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. These nondeductible contributions aren't taxed when they are distributed to you. They are a re-turn of your investment in your IRA.

Chapter 9Individual Retirement Arrangements (IRAs)Page 83

Only the part of the distribution that repre-sents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Until all of your basis has been distributed, each distribution is partly non-taxable and partly taxable.

Form 8606. You must complete Form 8606 and attach it to your return if you receive a distri-bution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Using the form, you will figure the nontax-able distributions for 2020 and your total IRA basis for 2020 and earlier years.

Note. If you are required to file Form 8606, but you aren't required to file an income tax re-turn, you must still file Form 8606. Send it to the IRS at the time and place you would otherwise file an income tax return.

Distributions reported on Form 1099-R. If you receive a distribution from your traditional IRA, you will receive Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Con-tracts, etc., or a similar statement. IRA distribu-tions are shown in boxes 1 and 2a of Form 1099-R. The number or letter codes in box 7 tell you what type of distribution you received from your IRA.

Withholding. Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld. See chap-ter 4.

IRA distributions delivered outside the United States. In general, if you are a U.S. citi-zen or resident alien and your home address is outside the United States or its possessions, you can't choose exemption from withholding on distributions from your traditional IRA.

Reporting taxable distributions on your re-turn. Report fully taxable distributions, includ-ing early distributions, on Form 1040 or 1040-SR, line 4b (no entry is required on Form 1040 or 1040-SR, line 4a). If only part of the dis-tribution is taxable, enter the total amount on Form 1040 or 1040-SR, line 4a, and the taxable part on Form 1040 or 1040-SR, line 4b.

What Acts Result in Penalties or Additional Taxes?

The tax advantages of using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you don't follow the rules.

There are additions to the regular tax for us-ing your IRA funds in prohibited transactions. There are also additional taxes for the following activities.

Investing in collectibles.

Having unrelated business income; see Pub. 590-B.

Making excess contributions.

Taking early distributions.

Allowing excess amounts to accumulate (failing to take required distributions).

There are penalties for overstating the amount of nondeductible contributions and for failure to file a Form 8606, if required.

Prohibited Transactions

Generally, a prohibited transaction is any im-proper use of your traditional IRA by you, your beneficiary, or any disqualified person.

Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendent, and any spouse of a lineal descendent).

The following are examples of prohibited transactions with a traditional IRA.

Borrowing money from it; see Pub. 590-B.

Selling property to it.

Using it as security for a loan.

Buying property for personal use (present or future) with IRA funds.

Effect on an IRA account. Generally, if you or your beneficiary engages in a prohibited trans-action in connection with your traditional IRA account at any time during the year, the ac-count stops being an IRA as of the first day of that year.

Effect on you or your beneficiary. If your ac-count stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its as-sets to you at their fair market values on the first day of the year. If the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. For information on figuring your gain and report-ing it in income, see Are Distributions Taxable, earlier. The distribution may be subject to addi-tional taxes or penalties.

Taxes on prohibited transactions. If some-one other than the owner or beneficiary of a tra-ditional IRA engages in a prohibited transaction, that person may be liable for certain taxes. In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax if the transaction isn't corrected.

More information. For more information on prohibited transactions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Pub. 590-A.

Investment in Collectibles

If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. You may have to pay the 10% additional tax on early distributions, discussed later.

Collectibles. These include:

Artworks,

Rugs,

Antiques,

Metals,

Gems,

Stamps,

Coins,

Alcoholic beverages, and

Certain other tangible personal property.

Exception. Your IRA can invest in one-, one-half-, one-quarter-, or one-tenth-ounce U.S. gold coins, or one-ounce silver coins min-ted by the Treasury Department. It can also in-vest in certain platinum coins and certain gold, silver, palladium, and platinum bullion.

Excess Contributions

Generally, an excess contribution is the amount contributed to your traditional IRA(s) for the year that is more than the smaller of:

The maximum deductible amount for the year (for 2020, this is $6,000 ($7,000 if you are 50 or older)); or

Your taxable compensation for the year.

An excess contribution could be the result of your contribution, your spouse's contribution, your employer's contribution, or an improper rollover contribution. If your employer makes contributions on your behalf to a SEP IRA, see chapter 2 of Pub. 560.

Tax on excess contributions. In general, if the excess contributions for a year aren't with-drawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on ex-cess amounts that remain in your traditional IRA at the end of your tax year. The tax can't be more than 6% of the combined value of all your IRAs as of the end of your tax year. The addi-tional tax is figured on Form 5329.

Excess contributions withdrawn by due date of return. You won't have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw interest or other income earned on the excess contribu-tion. You must complete your withdrawal by the date your tax return for that year is due, includ-ing extensions.

How to treat withdrawn contributions. Don't include in your gross income an excess contribution that you withdraw from your tradi-tional IRA before your tax return is due if both the following conditions are met.

No deduction was allowed for the excess contribution.

You withdraw the interest or other income earned on the excess contribution.

You can take into account any loss on the con-tribution while it was in the IRA when figuring the amount that must be withdrawn. If there was a loss, the net income you must withdraw may be a negative amount.

How to treat withdrawn interest or other income. You must include in your gross in-come the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess con-tribution was made. Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discussed later.

Page 84Chapter 9Individual Retirement Arrangements (IRAs)

Excess contributions withdrawn after due date of return. In general, you must include all distributions (withdrawals) from your traditional IRA in your gross income. However, if the fol-lowing conditions are met, you can withdraw ex-cess contributions from your IRA and not in-clude the amount withdrawn in your gross income.

Total contributions (other than rollover con-tributions) for 2020 to your IRA weren't more than $6,000 ($7,000 if you are age 50 or older).

You didn't take a deduction for the excess contribution being withdrawn.

The withdrawal can take place at any time, even after the due date, including extensions, for filing your tax return for the year.

Excess contribution deducted in an earlier year. If you deducted an excess contribution in an earlier year for which the total contributions weren't more than the maximum deductible amount for that year (see the following table), you can still remove the excess from your tradi-tional IRA and not include it in your gross in-come. To do this, file Form 1040-X for that year and don't deduct the excess contribution on the amended return. Generally, you can file an amended return within 3 years after you filed your return, or 2 years from the time the tax was paid, whichever is later.

		Contribution
		limit if age
	Contribution	50 or older
Year(s)		at the end of
	limit	the year
2019	$6,000	$7,000
2013 through	$5,500	$6,500
2018

2008 through	$5,000	$6,000
2012

2006 or 2007	$4,000	$5,000
2005	$4,000	$4,500
2002 through	$3,000	$3,500
2004

1997 through	$2,000	—
2001

before 1997	$2,250	—

Excess due to incorrect rollover informa-tion. If an excess contribution in your tradi-tional IRA is the result of a rollover and the ex-cess occurred because the information the plan was required to give you was incorrect, you can withdraw the excess contribution. The limits mentioned above are increased by the amount of the excess that is due to the incorrect infor-mation. You will have to amend your return for the year in which the excess occurred to correct the reporting of the rollover amounts in that year. Don't include in your gross income the part of the excess contribution caused by the in-correct information. For more information, see Excess Contributions under What Acts Result in Penalties or Additional Taxes? in Pub. 590-A.

Early Distributions

You must include early distributions of taxable amounts from your traditional IRA in your gross

income. Early distributions are also subject to an additional 10% tax. See the discussion of Form 5329 under Reporting Additional Taxes, later, to figure and report the tax.

Early distributions defined. Early distribu-tions are generally amounts distributed from your traditional IRA account or annuity before you are age 591/2.

Age 591/2 rule. Generally, if you are under age 591/2, you must pay a 10% additional tax on the distribution of any assets (money or other prop-erty) from your traditional IRA. Distributions be-fore you are age 591/2 are called early distribu-tions.

The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount.

After age 591/2 and before age 72. After you reach age 591/2, you can receive distribu-tions without having to pay the 10% additional tax. Even though you can receive distributions after you reach age 59 1/2, distributions aren't re-quired until you reach age 72. See When Must You Withdraw IRA Assets? (Required Minimum Distributions), earlier.

Exceptions. There are several exceptions to the age 591/2 rule. Even if you receive a distri-bution before you are age 591/2, you may not have to pay the 10% additional tax if you are in one of the following situations.

You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.

The distributions aren't more than the cost of your medical insurance due to a period of unemployment.

You are totally and permanently disabled.

You are the beneficiary of a deceased IRA owner.

You are receiving distributions in the form of an annuity.

The distributions aren't more than your qualified higher education expenses.

You use the distributions to buy, build, or rebuild a first home.

The distribution is due to an IRS levy of the qualified plan.

The distribution is a qualified reservist dis-tribution.

Most of these exceptions are explained under Early Distributions in What Acts Result in Penal-ties or Additional Taxes? in chapter 1 of Pub. 590-B.

Note. Distributions that are timely and prop-erly rolled over, as discussed earlier, aren't sub-ject to either regular income tax or the 10% ad-ditional tax. Certain withdrawals of excess contributions after the due date of your return are also tax free and therefore not subject to the 10% additional tax. (See Excess contributions withdrawn after due date of return, earlier.) This also applies to transfers incident to divorce, as discussed earlier.

Receivership distributions. Early distribu-tions (with or without your consent) from sav-ings institutions placed in receivership are sub-ject to this tax unless one of the exceptions listed earlier applies. This is true even if the dis-tribution is from a receiver that is a state agency.

Additional 10% tax. The additional tax on early distributions is 10% of the amount of the early distribution that you must include in your gross income. This tax is in addition to any reg-ular income tax resulting from including the dis-tribution in income.

Nondeductible contributions. The tax on early distributions doesn't apply to the part of a distribution that represents a return of your non-deductible contributions (basis).

More information. For more information on early distributions, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Pub. 590-B.

Excess Accumulations (Insufficient Distributions)

You can't keep amounts in your traditional IRA indefinitely. Generally, you must begin receiving distributions by April 1 of the year following the year in which you reach age 72. The required minimum distribution for any year after the year in which you reach age 72 must be made by December 31 of that later year.

Tax on excess. If distributions are less than the required minimum distribution for the year, you may have to pay a 50% excise tax for that year on the amount not distributed as required.

Request to waive the tax. If the excess accu-mulation is due to reasonable error, and you have taken, or are taking, steps to remedy the insufficient distribution, you can request that the tax be waived. If you believe you qualify for this relief, attach a statement of explanation and complete Form 5329 as instructed under Waiver of tax for reasonable cause in the In-structions for Form 5329.

Exemption from tax. If you are unable to take required distributions because you have a tradi-tional IRA invested in a contract issued by an in-surance company that is in state insurer delin-quency proceedings, the 50% excise tax doesn't apply if the conditions and requirements of Revenue Procedure 92-10 are satisfied.

More information. For more information on excess accumulations, see What Acts Result in Penalties or Additional Taxes? in chapter 1 of Pub. 590-B.

Reporting Additional Taxes

Generally, you must use Form 5329 to report the tax on excess contributions, early distribu-tions, and excess accumulations.

Filing a tax return. If you must file an individ-ual income tax return, complete Form 5329 and attach it to your Form 1040 or 1040-SR. Enter the total additional taxes due on Schedule 2 (Form 1040), line 6.

Not filing a tax return. If you don't have to file a tax return but do have to pay one of the

Chapter 9Individual Retirement Arrangements (IRAs)Page 85

additional taxes mentioned earlier, file the com-pleted Form 5329 with the IRS at the time and place you would have filed your Form 1040 or 1040-SR. Be sure to include your address on page 1 and your signature and date on page 2. Enclose, but don't attach, a check or money or-der payable to “United States Treasury” for the tax you owe, as shown on Form 5329. Enter your social security number and “2020 Form 5329” on your check or money order.

Form 5329 not required. You don't have to use Form 5329 if any of the following situations exists.

Distribution code 1 (early distribution) is correctly shown in box 7 of all your Forms 1099-R. If you don't owe any other addi-tional tax on a distribution, multiply the tax-able part of the early distribution by 10%

(0.10) and enter the result on Schedule 2 (Form 1040), line 6. Enter “No” to the left of the line to indicate that you don't have to file Form 5329. However, if you owe this tax and also owe any other additional tax on a distribution, don't enter this 10% addi-tional tax directly on your Form 1040 or 1040-SR. You must file Form 5329 to re-port your additional taxes.

If you rolled over part or all of a distribution from a qualified retirement plan, the part rolled over isn't subject to the tax on early distributions.

If you have a qualified 2018, 2019, or 2020 qualified disaster distribution. See Form 8915-C, Form 8915-D, or Form 8915-E, as applicable, for more details.

Roth IRAs

Regardless of your age, you may be able to es-tablish and make nondeductible contributions to a retirement plan called a Roth IRA.

Contributions not reported. You don't report Roth IRA contributions on your return.

What Is a Roth IRA?

A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined earlier). It can be either an account or an annu-ity. Individual retirement accounts and annuities are described under How Can a Traditional IRA Be Opened? in chapter 1 of Pub. 590-A.

To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.

Unlike a traditional IRA, you can't deduct contributions to a Roth IRA. But, if you satisfy the requirements, qualified distributions (dis-cussed later) are tax free. You can leave amounts in your Roth IRA as long as you live.

When Can a Roth IRA Be Opened?

You can open a Roth IRA at any time. However, the time for making contributions for any year is limited. See When Can You Make Contribu-tions, later, under Can You Contribute to a Roth IRA.

Can You Contribute to a Roth IRA?

Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later)

and your modified AGI (defined later) is less than:

$206,000 for married filing jointly or qualify-ing widow(er);

$139,000 for single, head of household, or married filing separately and you didn't live with your spouse at any time during the year; or

$10,000 for married filing separately and you lived with your spouse at any time dur-ing the year.

You may be eligible to claim a credit for TIP contributions to your Roth IRA. For more information, see chapter 3 of

Pub. 590-A.

Is there an age limit for contributions? Con-tributions can be made to your Roth IRA regard-less of your age.

Can you contribute to a Roth IRA for your spouse? You can contribute to a Roth IRA for your spouse provided the contributions satisfy the Kay Bailey Hutchison Spousal IRA limit (dis-cussed under How Much Can Be Contributed, earlier, under Traditional IRAs), you file jointly, and your modified AGI is less than $206,000.

Compensation. Compensation includes wa-ges, salaries, tips, professional fees, bonuses, and other amounts received for providing per-sonal services. It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable ali-mony and separate maintenance payments.

Modified AGI. Your modified AGI for Roth IRA purposes is your adjusted gross income (AGI) as shown on your return with some adjust-ments. Use Worksheet 9-2 below to determine your modified AGI.

Page 86Chapter 9Individual Retirement Arrangements (IRAs)

Worksheet 9-2. Modified Adjusted Gross Income for Roth IRA Purposes		Keep for Your Records
Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes.

1.	Enter your adjusted gross income from Form 1040 or 1040-SR, line 11 . . . . . . . . . . . . . . . .	1.
2.	Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth
	IRA (included on Form 1040 or 1040-SR, line 4b) and a rollover from a qualified retirement	2.
	plan to a Roth IRA (included on Form 1040 or 1040-SR, line 5b) . . . . . . . . . . . . . . . . . . . . .
3.	Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3.
4.	Enter any traditional IRA deduction from Schedule 1 (Form 1040), line 19 . . . . . . . . . . . . . .	4.
5a.	Enter any student loan interest deduction from Schedule 1 (Form 1040), line 20 . . . . . . . . .	5a.
5b.	Enter any tuition and fees deduction from Schedule 1 (Form 1040), line 21 . . . . . . . . . . . . .	5b.
6.	Enter any foreign earned income and/or housing exclusion from Form 2555, line 45 . . . . . .	6.
7.	Enter any foreign housing deduction from Form 2555, line 50 . . . . . . . . . . . . . . . . . . . . . . . .	7.
8.	Enter any excludable savings bond interest from Form 8815, line 14 . . . . . . . . . . . . . . . . . .	8.
9.	Enter any excluded employer-provided adoption benefits from Form 8839, line 28 . . . . . . .	9.
10.	Add the amounts on lines 3 through 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10.
11.	Enter:
	• $206,000 if married filing jointly or qualifying widow(er),
	• $10,000 if married filing separately and you lived with your
	spouse at any time during the year, or	11.
	• $139,000 for all others.
	Is the amount on line 10 more than the amount on line 11?
	If yes, then see the *Note* below.
	If no, then the amount on line 10 is your modified AGI for Roth IRA purposes.
	Note. If the amount on line 10 is more than the amount on line 11 and you have other income or loss items, such as social
	security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the
	purpose of figuring your modified AGI for Roth IRA purposes. (If you receive social security benefits, use Worksheet 1 in
	Appendix B of Pub. 590-A to refigure your AGI.) Then go to line 3 above in this Worksheet 9-2 to refigure your modified AGI. If
	you don't have other income or loss items subject to AGI-based phaseouts, your modified AGI for Roth IRA purposes is the
	amount on line 10.

How Much Can Be Contributed?

The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs.

Roth IRAs only. If contributions are made only to Roth IRAs, your contribution limit is generally the lesser of the following amounts.

$6,000 ($7,000 if you are 50 or older in 2020).

Your taxable compensation.

However, if your modified AGI is above a cer-tain amount, your contribution limit may be re-duced, as explained later under Contribution limit reduced.

Roth IRAs and traditional IRAs. If contribu-tions are made to both Roth IRAs and tradi-tional IRAs established for your benefit, your contribution limit for Roth IRAs is generally the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Employer contributions under a SEP or SIMPLE IRA plan don't affect this limit.

This means that your contribution limit is generally the lesser of the following amounts.

$6,000 ($7,000 if you are 50 or older in 2020) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs.

Your taxable compensation minus all con-tributions (other than employer contribu-tions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs.

However, if your modified AGI is above a cer-tain amount, your contribution limit may be re-duced, as explained next under Contribution limit reduced.

Contribution limit reduced. If your modified AGI is above a certain amount, your contribu-tion limit is gradually reduced. Use Table 9-3 to determine if this reduction applies to you.

Chapter 9Individual Retirement Arrangements (IRAs)Page 87

Table 9-3. Effect of Modified AGI on Roth IRA Contribution

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified adjusted gross income (modified AGI).

IF you have taxable compensation and	AND your modified	THEN...
your filing status is...	AGI is...
Married filing jointly or	less than $196,000	you can contribute up to $6,000 ($7,000 if you are 50 or
Qualifying widow(er)		older in 2020).
	at least $196,000	the amount you can contribute is reduced as explained
	but less than $206,000	under Contribution limit reduced in chapter 2 of Pub.
		590-A.
	$206,000 or more	you can't contribute to a Roth IRA.
Married filing separately and you lived	zero (-0-)	you can contribute up to $6,000 ($7,000 if you are 50 or
with your spouse at any time during the year		older in 2020).
	more than zero (-0-)	the amount you can contribute is reduced as explained
	but less than $10,000	under Contribution limit reduced in chapter 2 of Pub.
		590-A.
	$10,000 or more	you can't contribute to a Roth IRA.
Single,	less than $124,000	you can contribute up to $6,000 ($7,000 if you are 50 or
Head of household, or Married filing		older in 2020).
separately and you didn't live with your
	at least $124,000	the amount you can contribute is reduced as explained
spouse at any time during the year
	but less than $139,000	under Contribution limit reduced in chapter 2 of Pub.
		590-A.
	$139,000 or more	you can't contribute to a Roth IRA.

Figuring the reduction. If the amount you can contribute to your Roth IRA is reduced, see Worksheet 2-2 under Can You Contribute to a Roth IRA? in chapter 2 of Pub. 590-A for how to figure the reduction.

When Can You Make Contributions?

You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions).

You can make contributions for 2020 TIP by the due date (not including exten-

sions) for filing your 2020 tax return.

What if You Contribute Too Much?

A 6% excise tax applies to any excess contribu-tion to a Roth IRA.

Excess contributions. These are the contri-butions to your Roth IRAs for a year that equal the total of:

1. Amounts contributed for the tax year to your Roth IRAs (other than amounts prop-erly and timely rolled over from a Roth IRA or properly converted from a traditional IRA or rolled over from a qualified retire-ment plan, as described later) that are more than your contribution limit for the year; plus

2. Any excess contributions for the preceding year, reduced by the total of:

a. Any distributions out of your Roth IRAs for the year, plus

b. Your contribution limit for the year mi-nus your contributions to all your IRAs for the year.

Withdrawal of excess contributions. For purposes of determining excess contributions, any contribution that is withdrawn on or before the due date (including extensions) for filing your tax return for the year is treated as an amount not contributed. This treatment applies only if any earnings on the contributions are also withdrawn. The earnings are considered to have been earned and received in the year the excess contribution was made.

Applying excess contributions. If contribu-tions to your Roth IRA for a year were more than the limit, you can apply the excess contri-bution in one year to a later year if the contribu-tions for that later year are less than the maxi-mum allowed for that year.

Can You Move Amounts Into a Roth IRA?

You may be able to convert amounts from either a traditional, SEP, or SIMPLE IRA into a Roth IRA. You may be able to roll amounts over from a qualified retirement plan to a Roth IRA. You may be able to recharacterize contributions made to one IRA as having been made directly to a different IRA. You can roll amounts over from a designated Roth account or from one Roth IRA to another Roth IRA.

Conversions

You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regard-less of the conversion method used. Most of the rules for rollovers, described earlier under Roll-over From One IRA Into Another under Tradi-tional IRAs, apply to these rollovers. However, the 1-year waiting period doesn't apply.

Conversion methods. You can convert amounts from a traditional IRA to a Roth IRA in any of the following ways.

Rollover. You can receive a distribution from a traditional IRA and roll it over (con-tribute it) to a Roth IRA within 60 days after the distribution.

Trustee-to-trustee transfer. You can di-rect the trustee of the traditional IRA to transfer an amount from the traditional IRA to the trustee of the Roth IRA.

Same trustee transfer. If the trustee of the traditional IRA also maintains the Roth IRA, you can direct the trustee to transfer an amount from the traditional IRA to the Roth IRA.

Same trustee. Conversions made with the same trustee can be made by redesignating the traditional IRA as a Roth IRA, rather than open-ing a new account or issuing a new contract.

Rollover from a qualified retirement plan into a Roth IRA. You can roll over into a Roth IRA all or part of an eligible rollover distribution you receive from your (or your deceased spou-se's):

Employer's qualified pension, profit-shar-ing, or stock bonus plan;

Annuity plan;

Tax-sheltered annuity plan (section 403(b) plan); or

Governmental deferred compensation plan (section 457 plan).

Any amount rolled over is subject to the same rules as those for converting a traditional IRA into a Roth IRA. Also, the rollover contribution must meet the rollover requirements that apply to the specific type of retirement plan.

Page 88Chapter 9Individual Retirement Arrangements (IRAs)

Income. You must include in your gross in-come distributions from a qualified retirement plan that you would have had to include in in-come if you hadn't rolled them over into a Roth IRA. You don't include in gross income any part of a distribution from a qualified retirement plan that is a return of basis (after-tax contributions) to the plan that were taxable to you when paid. These amounts are normally included in income on your return for the year of the rollover from the qualified employer plan to a Roth IRA.

If you must include any amount in your

gross income, you may have to in-CAUTION crease your withholding or make esti-mated tax payments. See Pub. 505, Tax With-holding and Estimated Tax.

For more information, see Rollover From Employer's Plan Into a Roth IRA in chapter 2 of Pub. 590-A.

Converting from a SIMPLE IRA. Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained earlier under Converting From Any Traditional IRA to a Roth IRA under Traditional IRAs.

However, you can't convert any amount dis-tributed from the SIMPLE IRA during the 2-year period beginning on the date you first participa-ted in any SIMPLE IRA plan maintained by your employer.

More information. For more detailed informa-tion on conversions, see Can You Move Amounts Into a Roth IRA? in chapter 2 in Pub. 590-A.

Rollover From a Roth IRA

You can withdraw, tax free, all or part of the as-sets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Most of the rules for rollovers, explained earlier under Roll-over From One IRA Into Another under Tradi-tional IRAs, apply to these rollovers.

Rollover from designated Roth account. A rollover from a designated Roth account can

only be made to another designated Roth ac-count or to a Roth IRA. For more information about designated Roth accounts, see Designa-ted Roth accounts under Rollovers in Pub. 575.

Are Distributions Taxable?

You don't include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). You also don't include distributions from your Roth IRA that you roll over tax free into an-other Roth IRA. You may have to include part of other distributions in your income. See Ordering rules for distributions, later.

What are qualified distributions? A qualified distribution is any payment or distribution from your Roth IRA that meets the following require-ments.

1. It is made after the 5-year period begin-ning with the first tax year for which a con-tribution was made to a Roth IRA set up for your benefit.

2. The payment or distribution is:

a. Made on or after the date you reach age 591/2,

b. Made because you are disabled,

c. Made to a beneficiary or to your es-tate after your death, or

d. To pay up to $10,000 (lifetime limit) of certain qualified first-time homebuyer amounts. See First home under What Acts Result in Penalties or Additional Taxes? in chapter 1 of Pub. 590-B for more information.

Additional tax on distributions of conver-sion and certain rollover contributions within 5-year period. If, within the 5-year pe-riod starting with the first day of your tax year in which you convert an amount from a traditional IRA or roll over an amount from a qualified re-tirement plan to a Roth IRA, you take a distribu-

tion from a Roth IRA, you may have to pay the 10% additional tax on early distributions. You must generally pay the 10% additional tax on any amount attributable to the part of the amount converted or rolled over (the conversion or rollover contribution) that you had to include in income. A separate 5-year period applies to each conversion and rollover. See Ordering rules for distributions, later, to determine the amount, if any, of the distribution that is attribut-able to the part of the conversion or rollover contribution that you had to include in income.

Additional tax on other early distributions. Unless an exception applies, you must pay the 10% additional tax on the taxable part of any distributions that aren't qualified distributions. See Pub. 590-B for more information.

Ordering rules for distributions. If you re-ceive a distribution from your Roth IRA that isn't a qualified distribution, part of it may be taxable. There is a set order in which contributions (in-cluding conversion contributions and rollover contributions from qualified retirement plans) and earnings are considered to be distributed from your Roth IRA. Regular contributions are distributed first. See Ordering Rules for Distri-butions under Are Distributions Taxable? in chapter 2 of Pub. 590-B for more information.

Must you withdraw or use Roth IRA assets? You aren't required to take distributions from your Roth IRA at any age. The minimum distri-bution rules that apply to traditional IRAs don't apply to Roth IRAs while the owner is alive. However, after the death of a Roth IRA owner, certain minimum distribution rules that apply to traditional IRAs also apply to Roth IRAs.

More information. For more detailed informa-tion on Roth IRAs, see chapter 2 of Pub. 590-A and Pub. 590-B.

Chapter 9Individual Retirement Arrangements (IRAs)Page 89

Part Three.

Standard

Deduction,

Itemized

Deductions, and

Other

Deductions

After you have figured your adjusted gross income, you are ready to subtract the deductions used to figure taxable income. You can subtract either the standard deduction or itemized deductions, and, if you qualify, the qualified business income deduction. Itemized deductions are deductions for certain expenses that are listed on Schedule A (Form 1040). The three chapters in this part discuss the standard deduction and each itemized deduction. See chapter 10 for the factors to consider when deciding whether to take the standard deduction or itemized deductions. The Form 1040 and 1040-SR schedules that are discussed in these chapters are:

Schedule 1, Additional Income and Adjustments to Income;

Schedule 2 (Part II), Other Income; and

Schedule 3 (Part I), Nonrefundable Credits.

10.

Standard

Deduction

What's New

Standard deduction increased. The stand-ard deduction for taxpayers who don't itemize their deductions on Schedule A (Form 1040) has increased. The amount of your standard deduction depends on your filing status and other factors. Use the 2020 Standard Deduction Tables near the end of this chapter to figure your standard deduction.

In 2020, you are allowed a charitable TIP contribution deduction of up to $300 if you don't itemize your deductions. For more information, see Line 10b in the Instruc-

tions for Forms 1040 and 1040-SR.

Introduction

This chapter discusses the following topics.

How to figure the amount of your standard deduction.

The standard deduction for dependents.

Who should itemize deductions.

Most taxpayers have a choice of either tak-ing a standard deduction or itemizing their de-ductions. If you have a choice, you can use the method that gives you the lower tax.

The standard deduction is a dollar amount that reduces your taxable income. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical ex-penses, charitable contributions, and taxes, on

Page 90Chapter 10Standard Deduction

Schedule A (Form 1040). The standard deduc-tion is higher for taxpayers who:

Are 65 or older, or

Are blind.

You benefit from the standard deduc-TIP tion if your standard deduction is more than the total of your allowable item-

ized deductions.

Persons not eligible for the standard de-duction. Your standard deduction is zero and you should itemize any deductions you have if:

Your filing status is married filing sepa-rately, and your spouse itemizes deduc-tions on their return;

You are filing a tax return for a short tax year because of a change in your annual accounting period; or

You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonres-ident and resident alien during the year.

If you are a nonresident alien who is married to a U.S. citizen or resident alien at the end of the year, you can choose to be treated as a U.S. resident. (See Pub. 519.) If you make this choice, you can take the standard deduction.

If you can be claimed as a dependent

on another person’s return (such as CAUTION your parents’ return), your standard de-duction may be limited. See Standard Deduc-tion for Dependents, later.

Useful Items

You may want to see:

Publication

502 Medical and Dental Expenses

526 Charitable Contributions

530 Tax Information for Homeowners

547 Casualties, Disasters, and Thefts

550 Investment Income and Expenses

970 Tax Benefits for Education

936 Home Mortgage Interest Deduction

Form (and Instructions)

Schedule A (Form 1040) Itemized

Deductions

Standard Deduction Amount

The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether another taxpayer can claim you as a dependent. Generally, the standard deduction amounts are adjusted each year for inflation. The standard deduction amounts for most people are shown in Table 10-1.

Decedent's final return. The standard deduc-tion for a decedent's final tax return is the same as it would have been had the decedent contin-ued to live. However, if the decedent wasn't 65 or older at the time of death, the higher stand-ard deduction for age can't be claimed.

Higher Standard Deduction

for Age (65 or Older)

If you are age 65 or older on the last day of the year and don't itemize deductions, you are enti-tled to a higher standard deduction. You are considered 65 on the day before your 65th birthday. Therefore, you can take a higher standard deduction for 2020 if you were born before January 2, 1956.

Use Table 10-2 to figure the standard de-duction amount.

Death of a taxpayer. If you are preparing a re-turn for someone who died in 2020, read this before using Table 10-2 or Table 10-3. Consider the taxpayer to be 65 or older at the

end of 2020 only if they were 65 or older at the time of death. Even if the taxpayer was born be-fore January 2, 1956, they are not considered 65 or older at the end of 2020 unless they were 65 or older at the time of death.

A person is considered to reach age 65 on the day before their 65th birthday.

Higher Standard Deduction

for Blindness

If you are blind on the last day of the year and you don't itemize deductions, you are entitled to a higher standard deduction.

Not totally blind. If you aren't totally blind, you must get a certified statement from an eye doc-tor (ophthalmologist or optometrist) that:

You can't see better than 20/200 in the bet-ter eye with glasses or contact lenses, or

Your field of vision is 20 degrees or less.

If your eye condition isn't likely to improve beyond these limits, the statement should in-clude this fact. Keep the statement in your re-cords.

If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify.

Spouse 65 or Older or Blind

You can take the higher standard deduction if your spouse is age 65 or older or blind and:

You file a joint return, or

You file a separate return and your spouse had no gross income and can't be claimed as a dependent by another taxpayer.

Death of a spouse. If your spouse died in 2020 before reaching age 65, you can't take a higher standard deduction because of your spouse. Even if your spouse was born before January 2, 1956, he or she isn't considered 65 or older at the end of 2020 unless he or she was 65 or older at the time of death.

A person is considered to reach age 65 on the day before their 65th birthday.

Example. Your spouse was born on Febru-ary 14, 1955, and died on February 13, 2020. Your spouse is considered age 65 at the time of death. However, if your spouse died on Febru-ary 12, 2020, your spouse isn't considered age 65 at the time of death and isn't 65 or older at the end of 2020.

You can't claim the higher standard de-

duction for an individual other than CAUTION yourself and your spouse.

Higher Standard Deduction for Net Disaster Loss

Your standard deduction may be increased by any net qualified disaster loss.

See the Instructions for Forms 1040 and 1040-SR, and the Instructions for Schedule A (Form 1040) for more information on how to fig-ure your increased standard deduction and how to report it on Form 1040 or 1040-SR.

Examples

The following examples illustrate how to deter-mine your standard deduction using Tables 10-1 and 10-2.

Example 1. Larry, 46, and Donna, 33, are filing a joint return for 2020. Neither is blind, and neither can be claimed as a dependent. They decide not to itemize their deductions. They use Table 10-1. Their standard deduction is $24,800.

Example 2. The facts are the same as in Example 1, except that Larry is blind at the end of 2020. Larry and Donna use Table 10-2. Their standard deduction is $26,100.

Example 3. Bill and Lisa are filing a joint re-turn for 2020. Both are over age 65. Neither is blind, and neither can be claimed as a depend-ent. If they don't itemize deductions, they use Table 10-2. Their standard deduction is $27,400.

Standard Deduction for Dependents

The standard deduction for an individual who can be claimed as a dependent on another per-son's tax return is generally limited to the greater of:

$1,100, or

The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $12,400).

However, if the individual is 65 or older or blind, the standard deduction may be higher.

If you (or your spouse, if filing jointly) can be claimed as a dependent on someone else's re-turn, use Table 10-3 to determine your standard deduction.

Earned income defined. Earned income is salaries, wages, tips, professional fees, and other amounts received as pay for work you ac-tually perform.

For purposes of the standard deduction, earned income also includes any part of a taxa-ble scholarship or fellowship grant. See chap-ter 1 of Pub. 970, Tax Benefits for Education, for more information on what qualifies as a scholarship or fellowship grant.

Example 1. Michael is 16 years old and single. His parents can claim him as a depend-ent on their 2020 tax return. He has interest

income of $780 and wages of $150. He has no itemized deductions. Michael uses Table 10-3 to find his standard deduction. He enters $150 (his earned income) on line 1, $500 ($150 + $350) on line 3, $1,100 (the larger of $500 and $1,100) on line 5, and $12,400 on line 6. His standard deduction, on line 7a, is $1,100 (the smaller of $1,100 and $12,400).

Example 2. Joe, a 22-year-old college stu-dent, can be claimed as a dependent on his pa-rents' 2020 tax return. Joe is married and files a separate return. His wife doesn't itemize deduc-tions on her separate return. Joe has $1,500 in interest income and wages of $3,800. He has no itemized deductions. Joe finds his standard deduction by using Table 10-3. He enters his earned income, $3,800, on line 1. He adds lines 1 and 2 and enters $4,150 ($3,800 + $350) on line 3. On line 5, he enters $4,150, the larger of lines 3 and 4. Because Joe is married filing a separate return, he enters $12,400 on line 6. On line 7a, he enters $4,150 as his standard de-duction because it is smaller than $12,400, the amount on line 6.

Example 3. Amy, who is single, can be claimed as a dependent on her parents' 2020 tax return. She is 18 years old and blind. She has interest income of $1,300 and wages of $2,900. She has no itemized deductions. Amy uses Table 10-3 to find her standard deduction. She enters her wages of $2,900 on line 1. She adds lines 1 and 2 and enters $3,250 ($2,900 + $350) on line 3. On line 5, she enters $3,250, the larger of lines 3 and 4. Because she is sin-gle, Amy enters $12,400 on line 6. She enters $3,250 on line 7a. This is the smaller of the amounts on lines 5 and 6. Because she checked the box in the top part of the work-sheet, indicating she is blind, she enters $1,650 on line 7b. She then adds the amounts on lines 7a and 7b and enters her standard deduction of $4,900 ($3,250 + $1,650) on line 7c.

Example 4. Ed is 18 years old and single. His parents can claim him as a dependent on their 2020 tax return. He has wages of $7,000, interest income of $500, and a business loss of $3,000. He has no itemized deductions. Ed uses Table 10-3 to figure his standard deduc-tion. He enters $4,000 ($7,000 - $3,000) on line 1. He adds lines 1 and 2 and enters $4,350 ($4,000 + $350) on line 3. On line 5, he enters $4,350, the larger of lines 3 and 4. Because he is single, Ed enters $12,400 on line 6. On line 7a, he enters $4,350 as his standard de-duction because it is smaller than $12,400, the amount on line 6.

Who Should Itemize

You should itemize deductions if your total de-ductions are more than your standard deduc-tion amount. Also, you should itemize if you don't qualify for the standard deduction, as dis-cussed earlier under Persons not eligible for the standard deduction.

You should first figure your itemized deduc-tions and compare that amount to your stand-ard deduction to make sure you are using the method that gives you the greater benefit.

Chapter 10Standard DeductionPage 91

When to itemize. You may benefit from itemizing your deductions on Schedule A (Form 1040) if you:

Don't qualify for the standard deduction,

Had large uninsured medical and dental expenses during the year,

Paid interest and taxes on your home,

Had large uninsured casualty or theft los-ses,

Made large contributions to qualified chari-ties, or

Have total itemized deductions that are more than the standard deduction to which you are otherwise entitled.

These deductions are explained in chapter 11 (Taxes) and in the publications listed under Useful Items, earlier.

If you decide to itemize your deductions, complete Schedule A and attach it to your Form

1040 or 1040-SR. Enter the amount from Schedule A, line 17, on Form 1040 or Form 1040-SR, line 12.

Electing to itemize for state tax or other purposes. Even if your itemized deductions are less than your standard deduction, you can elect to itemize deductions on your federal re-turn rather than take the standard deduction. You may want to do this if, for example, the tax benefit of itemizing your deductions on your state tax return is greater than the tax benefit you lose on your federal return by not taking the standard deduction. To make this election, you must check the box on line 18 of Schedule A.

Changing your mind. If you don't itemize your deductions and later find that you should have itemized—or if you itemize your deductions and later find you shouldn't have—you can change your return by filing Form 1040-X, Amended U.S. Individual Income Tax Return. See Amen-

ded Returns and Claims for Refund in chapter 1 for more information on amended returns.

Married persons who filed separate re-turns. You can change methods of taking de-ductions only if you and your spouse both make the same changes. Both of you must file a con-sent to assessment for any additional tax either one may owe as a result of the change.

You and your spouse can use the method that gives you the lower total tax, even though one of you may pay more tax than you would have paid by using the other method. You both must use the same method of claiming deduc-tions. If one itemizes deductions, the other should itemize because they won't qualify for the standard deduction. See Persons not eligi-ble for the standard deduction, earlier.

Page 92Chapter 10Standard Deduction

2020 Standard Deduction Tables

!	If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you can't take the standard deduction
	even if you were born before January 2, 1956, or are blind.
CAUTION
Table 10-1. Standard Deduction Chart for Most People*

IF your filing status is...					THEN your standard deduction is...
Single or Married filing separately				$12,400
Married filing jointly or Qualifying widow(er)				24,800
Head of household				18,650
*Don't use this chart if you were born before January 2, 1956, are blind, or if someone else can claim you (or your spouse, if filing jointly) as a dependent. Use Table 10-2 or
10-3 instead.

Table 10-2. Standard Deduction Chart for People Born Before January 2, 1956, or Who Are Blind*

Check the correct number of boxes below. Then go to the chart.
You:		Born before January 2, 1956			Blind
Your spouse:		Born before January 2, 1956			Blind
Total number of boxes checked

IF			AND		THEN
your filing status is...			the number in the box above is...		your standard deduction is...
Single			1		$14,050
			2		15,700
Married filing jointly			1		$26,100
			2		27,400
			3		28,700
			4		30,000
Qualifying widow(er)			1		$26,100
			2		27,400
Married filing			1		$13,700
separately**			2		15,000
			3		16,300
			4		17,600
Head of household			1		$20,300
			2		21,950
*If someone else can claim you (or your spouse, if filing jointly) as a dependent, use Table 10-3 instead.
*You can check the boxes for Your Spouse* if your filing status is married filing separately and your spouse had no income, isn’t filing a return, and can’t be claimed as a
dependent on another person’s return.

Table 10-3. Standard Deduction Worksheet for Dependents

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

Check the correct number of boxes below. Then go to the worksheet.
You:			Born before January 2, 1956		Blind
Your spouse:			Born before January 2, 1956		Blind
Total number of boxes checked

1.	Enter your earned income (defined below). If none, enter -0-.			1.

2.	Additional amount.			2.	$350

3.	Add lines 1 and 2.			3.

4.	Minimum standard deduction.			4.	$1,100

5.	Enter the larger of line 3 or line 4.			5.

6.	Enter the amount shown below for your filing status.
	•	Single or Married filing separately— $12,400		6.
	• Married filing jointly— $24,800

	•	Head of household— $18,650
7.	Standard deduction.
	a.	Enter the smaller of line 5 or line 6. If born after January 1, 1956, and not blind, stop here. This is your		7a.
		standard deduction. Otherwise, go on to line 7b.
	b.	If born before January 2, 1956, or blind, multiply $1,650 ($1,300 if married) by the number in the box above.		7b.
	c.	Add lines 7a and 7b. This is your standard deduction for 2020.		7c.

Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any taxable scholarship or fellowship grant.

Chapter 10Standard DeductionPage 93

11.

Taxes

Reminders

Limitation on deduction for state and local taxes. The Tax Cuts and Jobs Act provided for a temporary limitation on the deduction for state and local taxes. See Limitation on deduc-tion for state and local taxes, later.

No deduction for foreign taxes paid for real estate. You can no longer deduct foreign taxes you paid on real estate.

Introduction

This chapter discusses which taxes you can de-duct if you itemize deductions on Schedule A (Form 1040). It also explains which taxes you can deduct on other schedules or forms and which taxes you can’t deduct.

This chapter covers the following topics.

Income taxes (federal, state, local, and for-eign).

General sales taxes (state and local).

Real estate taxes (state, local, and for-eign).

Personal property taxes (state and local).

Taxes and fees you can’t deduct.

Use Table 11-1 as a guide to determine which taxes you can deduct.

The end of the chapter contains a section that explains which forms you use to deduct dif-ferent types of taxes.

Business taxes. You can deduct certain taxes only if they are ordinary and necessary expen-ses of your trade or business or of producing in-come. For information on these taxes, see Pub. 535, Business Expenses.

State or local taxes. These are taxes im-posed by the 50 states, U.S. possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia.

Indian tribal government. An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as politi-cal subdivisions of a state) are deductible.

General sales taxes. These are taxes im-posed at one rate on retail sales of a broad range of classes of items.

Foreign taxes. These are taxes imposed by a foreign country or any of its political subdivi-sions.

Page 94Chapter 11Taxes

Useful Items

You may want to see:

Publication

502 Medical and Dental Expenses

503 Child and Dependent Care Expenses

504 Divorced or Separated individuals

514 Foreign Tax Credit for Individuals

525 Taxable and Nontaxable Income

530 Tax Information for Homeowners

Form (and Instructions)

Schedule A (Form 1040) Itemized

Deductions

Schedule E (Form 1040) Supplemental Income and Loss

1116 Foreign Tax Credit

For these and other useful items, go to IRS.gov/ Forms.

Tests To Deduct Any Tax

The following two tests must be met for you to deduct any tax.

The tax must be imposed on you.

You must pay the tax during your tax year.

The tax must be imposed on you. In gen-eral, you can deduct only taxes imposed on you.

Generally, you can deduct property taxes only if you are an owner of the property. If your spouse owns the property and pays the real es-tate taxes, the taxes are deductible on your spouse's separate return or on your joint return.

You must pay the tax during your tax year. If you are a cash basis taxpayer, you can de-duct only those taxes you actually paid during your tax year. If you pay your taxes by check and the check is honored by your financial insti-tution, the day you mail or deliver the check is the date of payment. If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of pay-ment. If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). See Pub. 538, Account-ing Periods and Methods, for details.

If you use an accrual method of accounting, see Pub. 538 for more information.

Income Taxes

This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes.

State and Local Income Taxes

You can deduct state and local income taxes.

Exception. You can’t deduct state and local in-come taxes you pay on income that is exempt from federal income tax, unless the exempt in-come is interest income. For example, you can’t deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax.

What To Deduct

Your deduction may be for withheld taxes, esti-mated tax payments, or other tax payments as follows.

Withheld taxes. You can deduct state and lo-cal income taxes withheld from your salary in the year they are withheld. Your Form(s) W-2 will show these amounts. Forms W-2G, 1099-B, 1099-DIV, 1099-G, 1099-K, 1099-MISC, 1099-NEC, 1099-OID, and 1099 -R may also show state and local income taxes withheld.

Estimated tax payments. You can deduct es-timated tax payments you made during the year to a state or local government. However, you must have a reasonable basis for making the estimated tax payments. Any estimated state or local tax payments that aren’t made in good faith at the time of payment aren’t deductible.

Example. You made an estimated state in-come tax payment. However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated pay-ment. You had no reasonable basis to believe you had any additional liability for state income taxes and you can’t deduct the estimated tax payment.

Refund applied to taxes. You can deduct any part of a refund of prior-year state or local in-come taxes that you chose to have credited to your 2020 estimated state or local income taxes.

Don’t reduce your deduction by either of the following items.

Any state or local income tax refund (or credit) you expect to receive for 2020.

Any refund of (or credit for) prior-year state and local income taxes you actually re-ceived in 2020.

However, part or all of this refund (or credit) may be taxable. See Refund (or credit) of state or local income taxes, later.

Separate federal returns. If you and your spouse file separate state, local, and federal in-come tax returns, each of you can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year.

Joint state and local returns. If you and your spouse file joint state and local returns and separate federal returns, each of you can de-duct on your separate federal return a part of the state and local income taxes paid during the tax year. You can deduct only the amount of the total taxes that is proportionate to your gross in-come compared to the combined gross income of you and your spouse. However, you can’t de-duct more than the amount you actually paid during the year. You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local

income taxes. If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid.

Joint federal return. If you file a joint federal return, you can deduct the state and local in-come taxes both of you paid.

Contributions to state benefit funds. As an employee, you can deduct mandatory contribu-tions to state benefit funds withheld from your wages that provide protection against loss of wages. For example, certain states require em-ployees to make contributions to state funds providing disability or unemployment insurance benefits. Mandatory payments made to the fol-lowing state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5a.

Alaska Unemployment Compensation Fund.

California Nonoccupational Disability Ben-efit Fund.

New Jersey Nonoccupational Disability Benefit Fund.

New Jersey Unemployment Compensation Fund.

New York Nonoccupational Disability Ben-efit Fund.

Pennsylvania Unemployment Compensa-tion Fund.

Rhode Island Temporary Disability Benefit Fund.

Washington State Supplemental Work-men's Compensation Fund.

Employee contributions to private or

voluntary disability plans aren’t deduc-

tible.CAUTION

Refund (or credit) of state or local income taxes. If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Schedule 1 (Form 1040), line 1, in the year you receive it. This includes refunds resulting from taxes that were overwithheld, applied from a prior-year re-turn, not figured correctly, or figured again be-cause of an amended return. If you didn’t item-ize your deductions in the previous year, don’t include the refund in income. If you deducted the taxes in the previous year, include all or part of the refund on Schedule 1 (Form 1040), line 1, in the year you receive the refund. For a discus-sion of how much to include, see Recoveries in Pub. 525, Taxable and Nontaxable Income, for more information.

Foreign Income Taxes

Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U.S. possession. However, you can’t take a deduction or credit for foreign income taxes paid on income that is exempt from U.S. tax under the foreign earned income exclusion or the foreign housing exclusion. For information on these exclusions, see Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. For information on the foreign tax credit, see Pub. 514.

State and Local General Sales Taxes

You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5a. You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction.

Actual expenses. Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate.

Food, clothing, and medical supplies. Sales taxes on food, clothing, and medical sup-plies are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.

Motor vehicles. Sales taxes on motor vehi-cles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. However, if you paid sales tax on a motor vehicle at a rate higher than the general sales tax, you can deduct only the amount of the tax that you would have paid at the general sales tax rate on that vehicle. Include any state and local general sales taxes paid for a leased motor vehicle. For purposes of this section, mo-tor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehi-cles, trucks, vans, and off-road vehicles.

If you use the actual expenses method,

you must have receipts to show the CAUTION general sales taxes paid.

Trade or business items. Don't include sales taxes paid on items used in your trade or business on Schedule A (Form 1040). Instead, go to the instructions for the form you are using to report business income and expenses to see if you can deduct these taxes.

Optional sales tax tables. Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instruc-tions for Schedule A (Form 1040). You may also be able to add the state and local general sales taxes paid on certain specified items.

Your applicable table amount is based on the state where you live, your income, and your family size. Your income is your adjusted gross income plus any nontaxable items such as the following.

Tax-exempt interest.

Veterans’ benefits.

Nontaxable combat pay.

Workers’ compensation.

Nontaxable part of social security and rail-road retirement benefits.

Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers.

Public assistance payments.

If you lived in different states during the same tax year, you must prorate your applica-ble table amount for each state based on the days you lived in each state. See the

instructions for Schedule A (Form 1040), line 5a, for details.

State and Local Real Estate Taxes

Deductible real estate taxes are any state and local taxes on real property levied for the gen-eral public welfare. You can deduct these taxes only if they are assessed uniformly against all property under the jurisdiction of the taxing au-thority. The proceeds must be for general com-munity or governmental purposes and not be a payment for a special privilege granted or serv-ice rendered to you.

Deductible real estate taxes generally don’t include taxes charged for local benefits and im-provements that increase the value of the prop-erty. They also don’t include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. For more information about taxes and charges that aren’t deductible, see Real Estate-Related Items You Can’t Deduct, later.

Tenant-shareholders in a cooperative hous-ing corporation. Generally, if you are a ten-ant-stockholder in a cooperative housing corpo-ration, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incur-red for your dwelling unit. The corporation should provide you with a statement showing your share of the taxes. For more information, see Special Rules for Cooperatives in Pub. 530.

Division of real estate taxes between buy-ers and sellers. If you bought or sold real es-tate during the year, the real estate taxes must be divided between the buyer and the seller.

The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. The seller is treated as paying the taxes up to, but not including, the date of sale. The buyer is treated as paying the taxes begin-ning with the date of sale. This applies regard-less of the lien dates under local law. Generally, this information is included on the settlement statement provided at the closing.

If you (the seller) can’t deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. This lets you deduct the part of the tax to the date of sale even though you didn’t ac-tually pay it. However, you must also include the amount of that tax in the selling price of the property. The buyer must include the same amount in his or her cost of the property.

You figure your deduction for taxes on each property bought or sold during the real property tax year as follows.

Chapter 11TaxesPage 95

Worksheet 11-1. Figuring Your State and Local Real Estate Tax Deduction Keep for Your Records

1. Enter the total state and local real estate taxes for the real property tax

year . . . . . . . . . . . . . . . . . . . .

2.	Enter the number of days in the real
	property tax year that you owned the
	property . . . . . . . . . . . . . . . . .
3.	Divide line 2 by 365 (for leap years,	.
	divide line 2 by 366) . . . . . . . . . . .

4. Multiply line 1 by line 3. This is your deduction. Enter it on Schedule A (Form 1040), line 5b . . . . . . . . . . . . . .

Note. Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Your total deduction is the sum of the line 4 amounts for all of the properties.

Real estate taxes for prior years. Don’t di-vide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Even if the buyer agrees to pay the delin-quent taxes, the buyer can’t deduct them. The buyer must add them to the cost of the property. The seller can deduct these taxes paid by the buyer. However, the seller must include them in the selling price.

Examples. The following examples illustrate how real estate taxes are divided between buyer and seller.

Example 1. Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with pay-ment due August 1. The tax on their old home, sold on May 7, was $620. The tax on their new home, bought on May 3, was $732. Dennis and Beth are considered to have paid a proportion-ate share of the real estate taxes on the old home even though they didn’t actually pay them to the taxing authority. On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount.

Dennis and Beth owned their old home dur-ing the real property tax year for 127 days (Jan-uary 1 to May 6, the day before the sale). They figure their deduction for taxes on their old home as follows.

Worksheet 11-1. Figuring Your

State and Local Real Estate Tax Deduction — Taxes on Old Home

1.	Enter the total state and local real estate	$620
	taxes for the real property tax year . . .

2. Enter the number of days in the real

property tax year that you owned the

property. . . . . . . . . . . . . . . .¹²⁷

3.Divide line 2 by 365 (for leap years,

divide line 2 by 366) . . . . . . . . . .^0.3470

4.Multiply line 1 by line 3. This is your

deduction. Enter it on Schedule A (Form

1040), line 5b . . . . . . . . . . . . .^$215

Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $215 in the selling price of the old home. (The buyers add the $215 to their cost of the home.)

Dennis and Beth owned their new home during the real property tax year for 243 days

Page 96Chapter 11Taxes

(May 3 to December 31, including their date of purchase). They figure their deduction for taxes on their new home as follows.

Worksheet 11-1. Figuring Your

State and Local Real Estate Tax Deduction — Taxes on New Home

1.	Enter the total state and local real estate	$732
	taxes for the real property tax year . . .
2.	Enter the number of days in the real
	property tax year that you owned the	243
	property . . . . . . . . . . . . . . . .
3.	Divide line 2 by 365 (for leap years,	0.6639
	divide line 2 by 366) . . . . . . . . . .
4.	Multiply line 1 by line 3. This is your
	deduction. Enter it on Schedule A (Form	$486
	1040), line 5b . . . . . . . . . . . . .

Since Dennis and Beth paid all of the taxes on the new home, they add $246 ($732 paid less $486 deduction) to their cost of the new home. (The sellers add this $246 to their selling price and deduct the $246 as a real estate tax.)

Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $215 and $486, or $701. They will enter this amount on Schedule A (Form 1040), line 5b.

Example 2. George and Helen Brown bought a new home on May 3, 2020. Their real property tax year for the new home is the calen-dar year. Real estate taxes for 2019 were as-sessed in their state on January 1, 2020. The taxes became due on May 31, 2020, and Octo-ber 31, 2020.

The Browns agreed to pay all taxes due af-ter the date of purchase. Real estate taxes for 2019 were $680. They paid $340 on May 31, 2020, and $340 on October 31, 2020. These taxes were for the 2019 real property tax year. The Browns can’t deduct them since they didn’t own the property until 2020. Instead, they must add $680 to the cost of their new home.

In January 2021, the Browns receive their 2020 property tax statement for $752, which they will pay in 2021. The Browns owned their new home during the 2020 real property tax year for 243 days (May 3 to December 31). They will figure their 2021 deduction for taxes as follows.

Worksheet 11-1. Figuring Your

State and Local Real Estate Tax Deduction — Taxes on New Home

1.	Enter the total state and local real estate	$752
	taxes for the real property tax year . . .
2.	Enter the number of days in the real
	property tax year that you owned the	243
	property . . . . . . . . . . . . . . . .
3.	Divide line 2 by 365 (for leap years,	0.6639
	divide line 2 by 366) . . . . . . . . . .
4.	Multiply line 1 by line 3. This is your
	deduction. Claim it on Schedule A	$499
	(Form 1040), line 5b . . . . . . . . . .

The remaining $253 ($752 paid less $499 de-duction) of taxes paid in 2021, along with the $680 paid in 2020, is added to the cost of their new home.

Because the taxes up to the date of sale are considered paid by the seller on the date of

sale, the seller is entitled to a 2020 tax deduc-tion of $933. This is the sum of the $680 for 2019 and the $253 for the 123 days the seller owned the home in 2020. The seller must also include the $933 in the selling price when he or she figures the gain or loss on the sale. The seller should contact the Browns in January 2021 to find out how much real estate tax is due for 2020.

Form 1099-S. For certain sales or ex-changes of real estate, the person responsible for closing the sale (generally, the settlement agent) prepares Form 1099 -S, Proceeds From Real Estate Transactions, to report certain infor-mation to the IRS and to the seller of the prop-erty. Box 2 of Form 1099-S is for the gross pro-ceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property.

For a real estate transaction that involves a home, any real estate tax the seller paid in ad-vance but that is the liability of the buyer ap-pears on Form 1099 -S, box 6. The buyer de-ducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduc-tion (or includes it in income) by the same amount. See Refund (or rebate), later.

Taxes placed in escrow. If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. You can de-duct only the real estate tax that the third party actually paid to the taxing authority. If the third party doesn’t notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return.

Tenants by the entirety. If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property.

Divorced individuals. If your divorce or sepa-ration agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be de-ductible as alimony and part as real estate taxes. See Payments to a third party in Pub. 504, Divorced or Separated Individuals, for more information.

Ministers’ and military housing allowances. If you are a minister or a member of the uni-formed services and receive a housing allow-ance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home.

Refund (or rebate). If you received a refund or rebate in 2020 of real estate taxes you paid in 2020, you must reduce your deduction by the amount refunded to you. If you received a re-fund or rebate in 2020 of real estate taxes you deducted in an earlier year, you generally must include the refund or rebate in income in the year you receive it. However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier

Table 11-1.Which Taxes Can You Deduct?

Type of Tax

You Can Deduct

You Can’t Deduct

Fees and Charges

Fees and charges that are expenses of your trade or

Fees and charges that aren’t expenses of your trade or

business or of producing income.

business or of producing income, such as fees for

driver's licenses, car inspections, parking, or

charges for water bills (see Taxes and Fees You

Can’t Deduct).

Fines and penalties.

Income Taxes

State and local income taxes.

Federal income taxes.

Foreign income taxes.

Employee contributions to private or voluntary

disability plans.

Employee contributions to state funds listed under

State and local general sales taxes if you choose to

Contributions to state benefit funds.

deduct state and local income taxes.

General Sales Taxes

State and local general sales taxes, including

State and local income taxes if you choose to deduct

compensating use taxes.

state and local general sales taxes.

Other Taxes

Taxes that are expenses of your trade or business.

Federal excise taxes, such as tax on gasoline, that

aren’t expenses of your trade or business or of

producing income.

Taxes on property producing rent or royalty income.

Per capita taxes.

One-half of self-employment tax paid.

Personal Property

State and local personal property taxes.

Customs duties that aren’t expenses of your trade or

Taxes

business or of producing income.

Real Estate Taxes

State and local real estate taxes.

Real estate taxes that are treated as imposed on

someone else (see Division of real estate taxes

between buyers and

sellers).

Tenant's share of real estate taxes paid by

Foreign real estate taxes.

cooperative housing corporation.

Taxes for local benefits (with exceptions). See Real

Estate-Related Items You Can’t Deduct.

Trash and garbage pickup fees (with exceptions). See

Real Estate-Related Items You Can’t Deduct.

Rent increase due to higher real estate taxes.

Homeowners' association charges.

year. For more information, see Recoveries in Pub. 525.

Real Estate-Related Items You Can’t Deduct

Payments for the following items generally aren’t deductible as real estate taxes.

Taxes for local benefits.

Itemized charges for services (such as trash and garbage pickup fees).

Transfer taxes (or stamp taxes).

Rent increases due to higher real estate taxes.

Homeowners' association charges.

Taxes for local benefits. Deductible real es-tate taxes generally don’t include taxes charged for local benefits and improvements tending to increase the value of your property. These in-clude assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. You should increase the basis of your property by the amount of the as-sessment.

Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. If only a part of the taxes is for maintenance, repair, or inter-est, you must be able to show the amount of that part to claim the deduction. If you can’t de-termine what part of the tax is for maintenance, repair, or interest, none of it is deductible.

Taxes for local benefits may be inclu-

ded in your real estate tax bill. If your CAUTION taxing authority (or mortgage lender) doesn’t furnish you a copy of your real estate tax bill, ask for it. You should use the rules above to determine if the local benefit tax is de-ductible. Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill.

Itemized charges for services. An itemized charge for services assessed against specific property or certain people isn’t a tax, even if the charge is paid to the taxing authority. For exam-ple, you can’t deduct the charge as a real estate tax if it is:

A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gal-lons of water you use),

A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or

A flat fee charged for a single service pro-vided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance).

You must look at your real estate tax

bill to determine if any nondeductible CAUTION itemized charges, such as those listed above, are included in the bill. If your taxing au-thority (or mortgage lender) doesn’t furnish you a copy of your real estate tax bill, ask for it.

Exception. Service charges used to main-tain or improve services (such as trash collec-tion or police and fire protection) are deductible as real estate taxes if:

The fees or charges are imposed at a like rate against all property in the taxing juris-diction;

The funds collected aren’t earmarked; in-stead, they are commingled with general revenue funds; and

Chapter 11TaxesPage 97

Funds used to maintain or improve serv-ices aren’t limited to or determined by the amount of these fees or charges collected.

Transfer taxes (or stamp taxes). Transfer taxes and similar taxes and charges on the sale of a personal home aren’t deductible. If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. If paid by the buyer, they are included in the cost basis of the property.

Rent increase due to higher real estate taxes. If your landlord increases your rent in the form of a tax surcharge because of in-creased real estate taxes, you can’t deduct the increase as taxes.

Homeowners' association charges. These charges aren’t deductible because they are im-posed by the homeowners' association, rather than the state or local government.

Personal Property Taxes

Personal property tax is deductible if it is a state or local tax that is:

Charged on personal property;

Based only on the value of the personal property; and

Charged on a yearly basis, even if it is col-lected more or less than once a year.

A tax that meets the above requirements can be considered charged on personal prop-erty even if it is for the exercise of a privilege. For example, a yearly tax based on value quali-fies as a personal property tax even if it is called a registration fee and is for the privilege of reg-istering motor vehicles or using them on the highways.

If the tax is partly based on value and partly based on other criteria, it may qualify in part.

Example. Your state charges a yearly mo-tor vehicle registration tax of 1% of value plus 50 cents per hundredweight. You paid $32 based on the value ($1,500) and weight (3,400 lbs.) of your car. You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. The remaining $17 ($0.50 × 34), based on the weight, isn’t deductible.

Taxes and Fees You Can’t Deduct

Many federal, state, and local government taxes aren’t deductible because they don’t fall within the categories discussed earlier. Other taxes and fees, such as federal income taxes, aren’t deductible because the tax law specifi-cally prohibits a deduction for them. See Ta-ble 11-1.

Taxes and fees that are generally not de-ductible include the following items.

Employment taxes. This includes social security, Medicare, and railroad retirement taxes withheld from your pay. However, one-half of self-employment tax you pay is deductible. In addition, the social security

and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct, or childcare expenses that allow you to claim the child and dependent care credit. For more information, see Pub. 502, Medical and Dental Expenses, and Pub. 503, Child and Dependent Care Expenses.

Estate, inheritance, legacy, or succes-sion taxes. You can deduct the estate tax attributable to income in respect of a dece-dent if you, as a beneficiary, must include that income in your gross income. In that case, deduct the estate tax on Schedule A (Form 1040), line 16. For more information, see Pub. 559, Survivors, Executors, and Administrators.

Federal income taxes. This includes in-come taxes withheld from your pay.

Fines and penalties. You can’t deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits.

Foreign personal or real property taxes.

Gift taxes.

License fees. You can’t deduct license fees for personal purposes (such as mar-riage, driver's, and pet license fees).

Per capita taxes. You can’t deduct state or local per capita taxes.

Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income-producing activity. For other nonde-ductible items, see Real Estate-Related Items You Can’t Deduct, earlier.

Where To Deduct

You deduct taxes on the following schedules.

State and local income taxes. These taxes are deducted on Schedule A (Form 1040), line 5a, even if your only source of income is from business, rents, or royalties.

Limitation on deduction for state and lo-cal taxes. The deduction for state and local taxes is limited to $10,000 ($5,000 if married fil-ing married separately). State and local taxes are the taxes that you include on Schedule A (Form 1040), lines 5a, 5b, and 5c. Include taxes imposed by a U.S. possession with your state and local taxes on Schedule A (Form 1040), lines 5a, 5b, and 5c. However, don't include any U.S. possession taxes you paid that are alloca-ble to excluded income.

You may want to take a credit for U.S.

TIPpossession tax instead of a deduction.

See the instructions for Schedule 3 (Form 1040), line 1, for details.

General sales taxes. Sales taxes are deduc-ted on Schedule A (Form 1040), line 5a. You must check the box on line 5a. If you elect to deduct sales taxes, you can’t deduct state and local income taxes on Schedule A (Form 1040), line 5a.

Foreign income taxes. Generally, income taxes you pay to a foreign country or U.S. pos-session can be claimed as an itemized deduc-tion on Schedule A (Form 1040), line 6, or as a credit against your U.S. income tax on Sched-ule 3 (Form 1040), line 1. To claim the credit, you may have to complete and attach Form 1116. For more information, see the Instructions for Forms 1040 and 1040-SR, or Pub. 514.

Real estate taxes and personal property taxes. Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 5b and 5c, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C (Form 1040) or Schedule F (Form 1040). Taxes on property that produces rent or royalty income are deduc-ted on Schedule E (Form 1040).

Self-employment tax. Deduct one-half of your self-employment tax on Schedule 1 (Form 1040), line 14.

Other taxes. All other deductible taxes are de-ducted on Schedule A (Form 1040), line 6.

12.

Other Itemized Deductions

What's New

Standard mileage rate. The 2020 rate for business use of a vehicle is 57.5 cents a mile.

Reminders

No miscellaneous itemized deductions al-lowed. You can no longer claim any miscella-neous itemized deductions. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-adjus-ted-gross-income (AGI) limitation. See Miscel-laneous Itemized Deductions, later.

Fines and penalties. Rules regarding deduct-ing fines and penalties have changed. See Fines and Penalties, later.

Introduction

This chapter explains that you can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified catego-ries of employment claiming a deduction relat-ing to unreimbursed employee expenses. Mis-cellaneous itemized deductions are those deductions that would have been subject to the 2%-of-AGI limitation. You can still claim certain expenses as itemized deductions on Sched-ule A (Form 1040), Schedule A (1040-NR), or as an adjustment to income on Form 1040 or

Page 98Chapter 12Other Itemized Deductions

1040-SR. This chapter covers the following top-ics.

Miscellaneous itemized deductions.

Expenses you can't deduct.

Expenses you can deduct.

How to report your deductions.

You must keep records to verify your deductions. You should keep receipts, RECORDS canceled checks, substitute checks, fi-

nancial account statements, and other docu-mentary evidence. For more information on re-cordkeeping, see What Records Should I Keep? in chapter 1.

Useful Items

You may want to see:

Publication

463 Travel, Gift, and Car Expenses

525 Taxable and Nontaxable Income

529 Miscellaneous Deductions

535 Business Expenses

547 Casualties, Disasters, and Thefts

575 Pension and Annuity Income

587 Business Use of Your Home

946 How To Depreciate Property

Form (and Instructions)

Schedule A (Form 1040) Itemized

Deductions

2106 Employee Business Expenses

8839 Qualified Adoption Expenses

Schedule K-1 (Form 1041) Beneficiary's

Share of Income, Deductions, Credits, etc.

For these and other useful items, go to IRS.gov/ Forms.

Miscellaneous Itemized Deductions

You can no longer claim any miscellaneous itemized deductions that are subject to the 2%-of-AGI limitation, including unreimbursed employee expenses. However, you may be able to deduct certain unreimbursed employee business expenses if you fall into one of the fol-lowing categories of employment listed under Unreimbursed Employee Expenses next.

Unreimbursed Employee Expenses

You can no longer claim a deduction for unreim-bursed employee expenses unless you fall into one of the following categories of employment.

Armed Forces reservists.

Qualified performing artists.

Fee-basis state or local government offi-cials.

Employees with impairment-related work expenses.

Categories of Employment

You can deduct unreimbursed employee ex-penses only if you qualify as an Armed Forces reservist, a qualified performing artist, a fee-ba-sis state or local government official, or an em-ployee with impairment-related work expenses.

Armed Forces reservist (member of a re-serve component). You are a member of a reserve component of the Armed Forces of the United States if you are in the Army, Navy, Ma-rine Corps, Air Force, or Coast Guard Reserve; the Army National Guard of the United States; or the Reserve Corps of the Public Health Serv-ice.

Qualified performing artist. You are a qualified performing artist if you:

1. Performed services in the performing arts as an employee for at least two employers during the tax year,

2. Received from at least two of the employ-ers wages of $200 or more per employer,

3. Had allowable business expenses attribut-able to the performing arts of more than 10% of gross income from the performing arts, and

4. Had AGI of $16,000 or less before deduct-ing expenses as a performing artist.

Fee-basis state or local government offi-cial. You are a qualifying fee-basis official if you are employed by a state or political subdivi-sion of a state and are compensated, in whole or in part, on a fee basis.

Employee with impairment-related work expenses. Impairment-related work expenses are the allowable expenses of an individual with physical or mental disabilities for attendant care at his or her place of employment. They also in-clude other expenses in connection with the place of employment that enable the employee to work. See Pub. 463, Travel, Gift, and Car Ex-penses, for more details.

Allowable unreimbursed employee expen-ses. If you qualify as an employee in one of the categories mentioned above, you may be able to deduct the following items as unreim-bursed employee expenses.

Unreimbursed employee expenses for indi-viduals in these categories of employment are deducted as adjustments to gross income. Qualified employees listed in one of the catego-ries above must complete Form 2106 to take the deduction.

You can deduct only unreimbursed em-ployee expenses that are paid or incurred dur-ing your tax year, for carrying on your trade or business of being an employee, and ordinary and necessary.

An expense is ordinary if it's common and accepted in your trade, business, or profession. An expense is necessary if it's appropriate and helpful to your business. An expense doesn't have to be required to be considered neces-sary.

Educator Expenses

If you were an eligible educator in 2020, you can deduct up to $250 of qualified expenses you paid in 2020 as an adjustment to gross in-come on Schedule 1 (Form 1040), line 10, rather than as a miscellaneous itemized deduc-tion. If you and your spouse are filing jointly and both of you were eligible educators, the maxi-mum deduction is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses. For additional information, see Educator Expenses in Pub. 529, Miscella-neous Deductions.

Expenses You Can’t Deduct

Because of the suspension of miscellaneous itemized deductions, there are two categories of expenses you can't deduct: miscellaneous itemized deductions subject to the 2%-of-AGI limitation, and those expenses that are tradi-tionally nondeductible under the Internal Reve-nue Code. Both categories of deduction are dis-cussed next.

Miscellaneous Deductions Subject to 2% AGI

Unless you fall into one of the qualified catego-ries of employment under Unreimbursed Em-ployee Expenses , earlier, miscellaneous item-ized deductions that are subject to the 2%-of-AGI limitation can no longer be claimed. For expenses not related to unreimbursed em-ployee expenses, you generally can't deduct the following expenses, even if you fall into one of the qualified categories of employment listed earlier.

Appraisal Fees

Appraisal fees you pay to figure a casualty loss or the fair market value of donated property are miscellaneous itemized deductions and can no longer be deducted.

Casualty and Theft Losses

Damaged or stolen property used in performing services as an employee is a miscellaneous de-duction and can no longer be deducted. For other casualty and theft losses, see Pub. 547, Casualties, Disasters, and Thefts.

Clerical Help and Office Rent

Office expenses, such as rent and clerical help, you pay in connection with your investments and collecting taxable income on those invest-ments are miscellaneous itemized deductions and are no longer deductible.

Credit or Debit Card Convenience Fees

The convenience fee charged by the card pro-cessor for paying your income tax (including es-timated tax payments) by credit or debit card is a miscellaneous itemized deduction and is no longer deductible.

Chapter 12Other Itemized DeductionsPage 99

Depreciation on Home Computer

If you use your home computer to produce in-come (for example, to manage your invest-ments that produce taxable income), the depre-ciation of the computer for that part of the usage of the computer is a miscellaneous itemized de-duction and is no longer deductible.

Fees To Collect Interest and Dividends

Fees you pay to a broker, bank, trustee, or simi-lar agent to collect your taxable bond interest or dividends on shares of stock are miscellaneous itemized deductions and can no longer be de-ducted.

Hobby Expenses

A hobby isn't a business because it isn't carried on to make a profit. Hobby expenses are mis-cellaneous itemized deductions and can no lon-ger be deducted. See Not-for-Profit Activities in chapter 1 of Pub. 535, Business Expenses.

Indirect Deductions of

Pass-Through Entities

Pass-through entities include partnerships, S corporations, and mutual funds that aren't pub-licly offered. Deductions of pass-through enti-ties are passed through to the partners or shareholders. The partner’s or shareholder’s share of passed-through deductions for invest-ment expenses are miscellaneous itemized de-ductions and can no longer be deducted.

Nonpublicly offered mutual funds. These funds will send you a Form 1099-DIV, Divi-dends and Distributions, or a substitute form, showing your share of gross income and invest-ment expenses. The investment expenses re-ported on Form 1099-DIV are a miscellaneous itemized deduction and are no longer deducti-ble.

Investment Fees and Expenses

Investment fees, custodial fees, trust adminis-tration fees, and other expenses you paid for managing your investments that produce taxa-ble income are miscellaneous itemized deduc-tions and are no longer deductible.

Legal Expenses

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.

Legal expenses that you incur in attempting to produce or collect taxable income, or that you pay in connection with the determination, collection, or refund of any tax are miscellane-ous itemized deductions and are no longer de-ductible.

You can deduct expenses of resolving tax issues relating to profit or loss from business re-ported on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), from rentals or royalties reported on Schedule E (Form 1040), Supplemental In-come and Loss, or from farm income and expenses reported on

Schedule F (Form 1040), Profit or Loss From Farming, on that schedule. Expenses for resolv-ing nonbusiness tax issues are miscellaneous itemized deductions and are no longer deducti-ble.

Loss on Deposits

For information on whether, and if so, how, you may deduct a loss on your deposit in a qualified financial institution, see Loss on Deposits in Pub. 547.

Repayments of Income

Generally, repayments of amounts that you in-cluded in income in an earlier year is a miscella-neous itemized deduction and can no longer be deducted. If you had to repay more than $3,000 that you included in your income in an earlier year, you may be able to deduct the amount. See Repayments Under Claim of Right, later.

Repayments of Social Security Benefits

For information on how to deduct your repay-ments of certain social security benefits, see Repayments More Than Gross Benefits in chapter 7.

Safe Deposit Box Rent

Rent you pay for a safe deposit box you use to store taxable income-producing stocks, bonds, or investment-related papers is a miscellaneous itemized deduction and can no longer be de-ducted. You also can't deduct the rent if you use the box for jewelry, other personal items, or tax-exempt securities.

Service Charges on Dividend Reinvestment Plans

Service charges you pay as a subscriber in a dividend reinvestment plan are a miscellaneous itemized deduction and can no longer be de-ducted. These service charges include pay-ments for:

Holding shares acquired through a plan,

Collecting and reinvesting cash dividends, and

Keeping individual records and providing detailed statements of accounts.

Tax Preparation Fees

Tax preparation fees on the return for the year in which you pay them are a miscellaneous itemized deduction and can no longer be de-ducted. These fees include the cost of tax prep-aration software programs and tax publications. They also include any fee you paid for elec-tronic filing of your return.

Trustee's Administrative Fees for IRA

Trustee's administrative fees that are billed sep-arately and paid by you in connection with your IRA are a miscellaneous itemized deduction

and can no longer be deducted. For more infor-mation about IRAs, see chapter 9.

Nondeductible Expenses

In addition to the miscellaneous itemized de-ductions discussed earlier, you can't deduct the following expenses.

List of Nondeductible Expenses

Adoption expenses.

Broker's commissions.

Burial or funeral expenses, including the cost of a cemetery lot.

Campaign expenses.

Capital expenses.

Check-writing fees.

Club dues.

Commuting expenses.

Fees and licenses, such as car licenses, marriage licenses, and dog tags.

Fines or penalties.

Health spa expenses.

Hobby losses, but see Hobby Expenses, earlier.

Home repairs, insurance, and rent.

Home security system.

Illegal bribes and kickbacks. See Bribes and kickbacks in chapter 11 of Pub. 535.

Investment-related seminars.

Life insurance premiums paid by the in-sured.

Lobbying expenses.

Losses from the sale of your home, furni-ture, personal car, etc.

Lost or misplaced cash or property.

Lunches with co-workers.

Meals while working late.

Medical expenses as business expenses other than medical examinations required by your employer.

Personal disability insurance premiums.

Personal legal expenses.

Personal, living, or family expenses.

Political contributions.

Professional accreditation fees.

Professional reputation improvement ex-pense.

Relief fund contributions.

Residential telephone line.

Stockholders’ meeting attendance expen-ses.

Tax-exempt income earning/collecting ex-penses.

The value of wages never received or lost vacation time.

Page 100Chapter 12Other Itemized Deductions

Travel expenses for another individual.

Voluntary unemployment benefit fund con-tributions.

Wristwatches.

Adoption Expenses

You can't deduct the expenses of adopting a child, but you may be able to take a credit for those expenses, see the Instructions for Form 8839, Qualified Adoption Expenses, for more information.

Campaign Expenses

You can't deduct campaign expenses of a can-didate for any office, even if the candidate is running for reelection to the office. These in-clude qualification and registration fees for pri-mary elections.

Legal fees. You can't deduct legal fees paid to defend charges that arise from participa-tion in a political campaign.

Check-Writing Fees on Personal Account

If you have a personal checking account, you can't deduct fees charged by the bank for the privilege of writing checks, even if the account pays interest.

Club Dues

Generally, you can't deduct the cost of mem-bership in any club organized for business, pleasure, recreation, or other social purpose. This includes business, social, athletic, lun-cheon, sporting, airline, hotel, golf, and country clubs.

You can't deduct dues paid to an organiza-tion if one of its main purposes is to:

Conduct entertainment activities for mem-bers or their guests, or

Provide members or their guests with ac-cess to entertainment facilities.

Dues paid to airline, hotel, and luncheon clubs aren't deductible.

Commuting Expenses

You can't deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). If you haul tools, instruments, or other items in your car to and from work, you can deduct only the addi-tional cost of hauling the items such as the rent on a trailer to carry the items.

Fines and Penalties

Generally, no deduction is allowed for fines and penalties paid to a government or specified nongovernmental entity for the violation of any law except in the following situations.

Amounts that constitute restitution.

Amounts paid to come into compliance with the law.

Amounts paid or incurred as the result of certain court orders in which no govern-ment or specified nongovernmental agency is a party.

Amounts paid or incurred for taxes due.

Nondeductible amounts include an amount paid in settlement of your actual or potential lia-bility for a fine or penalty (civil or criminal). Fines or penalties include amounts paid such as park-ing tickets, tax penalties, and penalties deduc-ted from teachers' paychecks after an illegal strike.

Beginning on December 22, 2017, no de-duction is allowed for the restitution amount or amount paid to come into compliance with the law unless the amounts are specifically identi-fied in the settlement agreement or court order. Also, any amount paid or incurred as reim-bursement to the government for the costs of any investigation or litigation are not eligible for the exceptions and are nondeductible.

Health Spa Expenses

You can't deduct health spa expenses, even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer.

Home Security System

You can't deduct the cost of a home security system as a miscellaneous deduction. How-ever, you may be able to claim a deduction for a home security system as a business expense if you have a home office. See Security system under Figuring the Deduction in Pub. 587.

Investment-Related Seminars

You can't deduct any expenses for attending a convention, seminar, or similar meeting for in-vestment purposes.

Life Insurance Premiums

You can't deduct premiums you pay on your life insurance. You may be able to deduct, as ali-mony, premiums you pay on life insurance poli-cies assigned to your former spouse. See Pub. 504, Divorced or Separated Individuals, for in-formation on alimony.

Lobbying Expenses

You generally can't deduct amounts paid or in-curred for lobbying expenses. These include expenses to:

Influence legislation;

Participate or intervene in any political campaign for, or against, any candidate for public office;

Attempt to influence the general public, or segments of the public, about elections, legislative matters, or referendums; or

Communicate directly with covered execu-tive branch officials in any attempt to influ-ence the official actions or positions of those officials.

Lobbying expenses also include any amounts paid or incurred for research, preparation,

planning, or coordination of any of these activi-ties.

Dues used for lobbying. If a tax-exempt organization notifies you that part of the dues or other amounts you pay to the organization are used to pay nondeductible lobbying expenses, you can't deduct that part. See Lobbying Ex-penses in Pub. 529 for information on excep-tions.

Lost or Mislaid Cash or Property

You can't deduct a loss based on the mere dis-appearance of money or property. However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. See Pub. 547 for more information.

Lunches With Co-Workers

You can't deduct the expenses of lunches with co-workers, except while traveling away from home on business. See Pub. 463 for informa-tion on deductible expenses while traveling away from home.

Meals While Working Late

You can't deduct the cost of meals while work-ing late. However, you may be able to claim a deduction if the cost of meals is a deductible entertainment expense, or if you're traveling away from home. See Pub. 463 for information on deductible entertainment expenses and ex-penses while traveling away from home.

Personal Legal Expenses

You can't deduct personal legal expenses such as those for the following.

Custody of children.

Breach of promise to marry suit.

Civil or criminal charges resulting from a personal relationship.

Damages for personal injury, except for certain unlawful discrimination and whis-tle-blower claims.

Preparation of a title (or defense or perfec-tion of a title).

Preparation of a will.

Property claims or property settlement in a divorce.

You can't deduct these expenses even if a result of the legal proceeding is the loss of in-come-producing property.

Political Contributions

You can't deduct contributions made to a politi-cal candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or pro-grams that benefit a political party or political candidate aren't deductible.

Chapter 12Other Itemized DeductionsPage 101

Professional Accreditation Fees

You can't deduct professional accreditation fees such as the following.

Accounting certificate fees paid for the ini-tial right to practice accounting.

Bar exam fees and incidental expenses in securing initial admission to the bar.

Medical and dental license fees paid to get initial licensing.

Professional Reputation

You can't deduct expenses of radio and TV ap-pearances to increase your personal prestige or establish your professional reputation.

Relief Fund Contributions

You can't deduct contributions paid to a private plan that pays benefits to any covered em-ployee who can't work because of any injury or illness not related to the job.

Residential Telephone Service

You can't deduct any charge (including taxes) for basic local telephone service for the first tel-ephone line to your residence, even if it's used in a trade or business.

Stockholders' Meetings

You can't deduct transportation and other ex-penses you pay to attend stockholders' meet-ings of companies in which you own stock but have no other interest. You can't deduct these expenses even if you're attending the meeting to get information that would be useful in mak-ing further investments.

Tax-Exempt Income Expenses

You can't deduct expenses to produce tax-ex-empt income. You can't deduct interest on a debt incurred or continued to buy or carry tax-exempt securities.

If you have expenses to produce both taxa-ble and tax-exempt income, but you can't iden-tify the expenses that produce each type of in-come, you must divide the expenses based on the amount of each type of income to determine the amount that you can deduct.

Travel Expenses for Another Individual

You generally can't deduct travel expenses you pay or incur for a spouse, dependent, or other individual who accompanies you (or your em-ployee) on business or personal travel unless the spouse, dependent, or other individual is an employee of the taxpayer, the travel is for a bona fide business purpose, and such expen-ses would otherwise be deductible by the spouse, dependent, or other individual. See Pub. 463 for more information on deductible travel expenses.

Voluntary Unemployment Benefit Fund Contributions

You can't deduct voluntary unemployment ben-efit fund contributions you make to a union fund or a private fund. However, you can deduct contributions as taxes if state law requires you to make them to a state unemployment fund that covers you for the loss of wages from un-employment caused by business conditions.

Wristwatches

You can't deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties.

Expenses You Can Deduct

You can deduct the items listed below as item-ized deductions. Report these items on Sched-ule A (Form 1040), line 16, or Schedule A (Form 1040-NR), line 7.

List of Deductions

Each of the following items is discussed in de-tail after the list (except where indicated).

Amortizable premium on taxable bonds.

Casualty and theft losses from income-producing property.

Excess deductions of an estate or trust.

Federal estate tax on income in respect of a decedent.

Gambling losses up to the amount of gam-bling winnings.

Impairment-related work expenses of per-sons with disabilities.

Losses from Ponzi-type investment schemes (see Pub. 547 for more informa-tion).

Repayments of more than $3,000 under a claim of right.

Unlawful discrimination claims.

Unrecovered investment in an annuity.

Amortizable Premium on Taxable Bonds

In general, if the amount you pay for a bond is greater than its stated principal amount, the ex-cess is bond premium. You can elect to amor-tize the premium on taxable bonds. The amorti-zation of the premium is generally an offset to interest income on the bond rather than a sepa-rate deduction item.

Part of the premium on some bonds may be an itemized deduction on Schedule A (Form 1040). For more information, see Amortizable Premium on Taxable Bonds in Pub. 529, and Bond Premium Amortization in chapter 3 of Pub. 550, Investment Income and Expenses.

Casualty and Theft Losses of Income-Producing Property

You can deduct a casualty or theft loss as an itemized deduction on Schedule A (Form 1040), line 16, if the damaged or stolen property was income-producing property (property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art). First, re-port the loss in Form 4684, Section B. You may also have to include the loss on Form 4797 if you're otherwise required to file that form. To figure your deduction, add all casualty or theft losses from this type of property included on Form 4684, lines 32 and 38b, or Form 4797, line 18a. For more information on casualty and theft losses, see Pub. 547.

Excess Deductions of an Estate or Trust

Generally, if an estate or trust has an excess deduction resulting from total deductions being greater than its gross income, in the estate’s or trust's last tax year, a beneficiary can deduct the excess deductions, depending on its char-acter. The excess deductions retain their char-acter as an adjustment to arrive at adjusted gross income on Schedule 1 (Form 1040), as a non-miscellaneous itemized deduction reported on Schedule A (Form 1040), or as a miscellane-ous itemized deduction. For more information on excess deductions of an estate or trust, see the Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040.

Federal Estate Tax on Income in Respect of a Decedent

You can deduct the federal estate tax attributa-ble to income in respect of a decedent that you as a beneficiary include in your gross income. Income in respect of the decedent is gross in-come that the decedent would have received had death not occurred and that wasn't properly includible in the decedent's final income tax re-turn. See Pub. 559, Survivors, Executors, and Administrators, for more information.

Gambling Losses up to the Amount of Gambling Winnings

You must report the full amount of your gam-bling winnings for the year on Schedule 1 (Form 1040), line 8. You deduct your gambling losses for the year on Schedule A (Form 1040), line 16. You can't deduct gambling losses that are more than your winnings.

You can't reduce your gambling win-

nings by your gambling losses and re-CAUTION port the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of win-nings) as an itemized deduction. Therefore, your records should show your winnings sepa-rately from your losses.

Diary of winnings and losses. You

must keep an accurate diary or similar RECORDS record of your losses and winnings.

Your diary should contain at least the following information.

Page 102Chapter 12Other Itemized Deductions

The date and type of your specific wager or wagering activity.

The name and address or location of the gambling establishment.

The names of other persons present with you at the gambling establishment.

The amount(s) you won or lost.

See Pub. 529 for more information.

Impairment-Related Work Expenses

If you have a physical or mental disability that limits your being employed, or substantially lim-its one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can de-duct your impairment-related work expenses.

Impairment-related work expenses are ordi-nary and necessary business expenses for at-tendant care services at your place of work and for other expenses in connection with your

place of work that are necessary for you to be able to work.

Self-employed. If you're self-employed, en-ter your impairment-related work expenses on the appropriate form (Schedule C (Form 1040), Schedule E (Form 1040), or Schedule F (Form 1040)) used to report your business income and expenses.

Repayments Under Claim of Right

If you had to repay more than $3,000 that you included in your income in an earlier year be-cause at the time you thought you had an unre-stricted right to it, you may be able to deduct the amount you repaid or take a credit against your tax. See Repayments in chapter 8 for more in-formation.

Unlawful Discrimination Claims

You may be able to deduct, as an adjustment to income on Schedule 1 (Form 1040), line 22, at-torney fees and court costs for actions settled

or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U.S. Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. However, the amount you can deduct on Schedule 1 (Form 1040), line 22, is limited to the amount of the judgment or settlement you are including in income for the tax year. See Pub. 525, Taxable and Nontaxable Income, for more information.

Unrecovered Investment in Annuity

A retiree who contributed to the cost of an an-nuity can exclude from income a part of each payment received as a tax-free return of the re-tiree's investment. If the retiree dies before the entire investment is recovered tax free, any un-recovered investment can be deducted on the retiree's final income tax return. See Pub. 575, Pension and Annuity Income, for more informa-tion about the tax treatment of pensions and an-nuities.

Chapter 12Other Itemized DeductionsPage 103

Part Four.

Figuring Your Taxes, and Refundable and Nonrefundable Credits

The two chapters in this part explain how to figure your tax. They also discuss tax credits that, unlike deductions, are subtracted directly from your tax and reduce your tax dollar for dollar.

The Form 1040 and 1040-SR schedules that are discussed in these chapters are:

Schedule 1, Additional Income and Adjustments to Income;

Schedule 2, Additional Taxes; and

Schedule 3, Additional Credits and Payments.

13.

How To Figure Your Tax

Introduction

After you have figured your income and deduc-tions your next step is to figure your tax. This chapter discusses:

The general steps you take to figure your tax,

An additional tax you may have to pay called the alternative minimum tax (AMT), and

The conditions you must meet if you want the IRS to figure your tax.

Useful Items

You may want to see:

Publication

503 Child and Dependent Care Expenses

505 Tax Withholding and Estimated Tax

524 Credit for the Elderly or Disabled

525 Taxable and Nontaxable Income

531 Reporting Tip Income

550 Investment Income and Expenses

560 Retirement Plans for Small Business

575 Pension and Annuity Income

596 Earned Income Credit (EIC)

926 Household Employer’s Tax Guide

929 Tax Rules for Children and Dependents

969 Health Savings Accounts and Other

Tax-Favored Health Plans

970 Tax Benefits for Education

972 Child Tax Credit and Credit for Other Dependents

974 Premium Tax Credit (PTC)

Form (and Instructions) W-2 Wage and Tax Statement Schedule SE (Form 1040) Self

				Employment Tax
			1116	Foreign Tax Credit


			3800	General Business Credit


			4136	Credit for Federal Tax Paid on Fuels


			4970	Tax on Accumulation Distribution of

				Trusts
			5329	Additional Taxes on Qualified Plans

				(Including IRAs) and Other
				Tax-Favored Accounts
			5405	Repayment of the First-Time

				Homebuyer Credit
			5695	Residential Energy Credit


			5884	Work Opportunity Credit


			8396	Mortgage Interest Credit


			8801	Credit for Prior Year Minimum

				Tax—Individuals, Estates, and Trusts
			8835	Renewable, Electricity, Refined

				Coal, and Indian Coal Production
				Credit
			8839	Qualified Adoption Expenses


			8846	Credit for Employer Social Security


				and Medicare Taxes Paid on Certain
				Employee Tips
			8853	Archer MSAs and Long-Term Care

				Insurance Contracts
			8880	Credit for Qualified Retirement

				Savings Contributions
			8885	Health Coverage Tax Credit


			8889	Health Savings Accounts (HSAs)


			8910	Alternative Motor Vehicle Credit


			8912	Credit to Holders of Tax Credit

				Bonds
			8936	Qualified Plug-In Electric Drive

				Motor Vehicle Credit

8959 Additional Medicare Tax

8960 Net Investment Tax—Individuals,

Estates, and Trusts

8962 Premium Tax Credit (PTC)

Figuring Your Tax

Your income tax is based on your taxable in-come. After you figure your income tax and AMT, if any, subtract your tax credits and add any other taxes you may owe. The result is your total tax. Compare your total tax with your total payments to determine whether you are entitled to a refund or must make a payment.

This section provides a general outline of how to figure your tax. You can find step-by-step directions in the Instructions for Forms 1040 and 1040-SR.

Tax. Most taxpayers use either the Tax Table or the Tax Computation Worksheet to figure their income tax. However, there are special methods if your income includes any of the fol-lowing items.

A net capital gain. See Pub. 550.

Qualified dividends taxed at the same rates as a net capital gain. See Pub. 550.

Lump-sum distributions. See Pub. 575.

Farming or fishing income. See Schedule J (Form 1040).

Tax for certain children who have un-earned income. See Pub. 929.

Parent's election to report child's interest and dividends. See Pub. 929.

Foreign earned income exclusion or the housing exclusion. (See Form 2555, For-eign Earned Income, and the Foreign Earned Income Tax Worksheet in the In-structions for Forms 1040 and 1040-SR.)

Credits. After you figure your income tax and any AMT (discussed later), determine if you are eligible for any tax credits. Eligibility information for these tax credits is discussed in other publi-cations and your form instructions. The follow-ing items are some of the credits you may be able to subtract from your tax and shows where you can find more information on each credit.

Adoption credit. See Form 8839.

Page 104Chapter 13How To Figure Your Tax

Alternative motor vehicle credit. See Form 8910.

Child and dependent care credit. See Pub. 503.

Child tax credit. See Pub. 972.

Credit for employer social security and Medicare taxes paid on certain employee tips. See Form 8846.

Credit to holders of tax credit bonds. See Form 8912.

Education credit. See Pub. 970.

Elderly or disabled credit. See Pub. 524.

Foreign tax credit. See Form 1116.

General business credit. See Form 3800.

Mortgage interest credit. See Form 8396.

Plug-in electric drive motor credit. See Form 8936.

Premium tax credit. See Pub. 974.

Prior year minimum tax credit. See Form 8801.

Renewable electricity, refined coal, and In-dian coal production credit. See Form 8835.

Residential energy credit. See Form 5695.

Retirement savings contribution credit. See Form 8880.

Work opportunity credit. See Form 5884.

Some credits (such as the earned income credit) aren’t listed because they are treated as payments. See Payments, later.

Other taxes. After you subtract your tax cred-its, determine whether there are any other taxes you must pay. This chapter doesn’t explain these other taxes. You can find that information in other publications and your form instructions. See the following list for other taxes you may need to add to your income tax.

Additional Medicare tax. See Form 8959.

Additional tax on ABLE accounts. See Pub. 969.

Additional tax on Archer MSAs and long-term care insurance contracts. See Form 8853.

Additional tax on Coverdell ESAs. See Form 5329.

Additional tax on HSAs. See Form 8889.

Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain require-ments. See the Instructions for Forms 1040 and 1040-SR.

Additional tax on qualified plans and other tax-favored accounts. See Form 5329.

Additional tax on qualified retirement plans and IRAs. See Form 5329.

Additional tax on qualified tuition pro-grams. See Pub. 970.

Excise tax on insider stock compensation from an expatriated corporation. See the Instructions for Forms 1040 and 1040-SR.

Household employment taxes. See Pub. 926.

Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000. See the Instructions for Forms 1040 and 1040-SR.

Interest on the tax due on installment in-come from the sale of certain residential lots and timeshares. See the Instructions for Forms 1040 and 1040-SR.

Net investment income tax. See Form 8960.

Recapture of an education credit. See Pub. 970.

Recapture taxes. See the Instructions for Forms 1040 and 1040-SR.

Repayment of first-time homebuyer credit. See Form 5405.

Section 72(m)(5) excess benefits tax. See Pub. 560.

Self-employment tax. See the Sched-ule SE (Form 1040).

Social security and Medicare tax on tips. See Pub. 531.

Social security and Medicare tax on wa-ges. See Pub. 525.

Tax on accumulation distribution of trusts. See Form 4970.

Tax on golden parachute payments. See the Instructions for Forms 1040 and 1040-SR.

Uncollected social security and Medicare tax on group-term life insurance. See Form W-2.

Uncollected social security and Medicare tax on tips. See Pub. 531.

You may also have to pay AMT (discussed later in this chapter).

Payments. After you determine your total tax, figure the total payments you have already made for the year. Include credits that are trea-ted as payments. This chapter doesn’t explain these payments and credits. You can find that information in other publications and your form instructions. See the following list of payments and credits that you may be able to include in your total payments.

American opportunity credit. See Pub. 970.

Child tax credit (additional). See Pub. 972.

Credit for federal tax on fuels. See Form 4136.

Credit for tax on undistributed capital gain. See the Instructions for Forms 1040 and 1040-SR.

Deferral for certain Schedule H or SE filers. See the Instructions for Forms 1040 and 1040-SR.

Earned income credit. See Pub. 596.

Estimated tax paid. See Pub. 505.

Excess social security and RRTA tax with-held. See the Instructions for Forms 1040 and 1040-SR.

Federal income tax withheld. See Pub. 505.

Health coverage tax credit. See Form 8885.

Net premium tax credit. See the Instruc-tions for Form 8962 or the Instructions for Forms 1040 and 1040-SR.

Qualified sick and family leave credits. See the Instructions for Forms 1040 and 1040-SR.

Recovery rebate credit. See the Instruc-tions for Forms 1040 and 1040-SR.

Tax paid with extension. See the Instruc-tions for Forms 1040 and 1040-SR.

Refund or balance due. To determine whether you are entitled to a refund or whether you must make a payment, compare your total payments with your total tax. If you are entitled to a refund, see your form instructions for infor-mation on having it directly deposited into one or more of your accounts (including a traditional IRA, Roth IRA, or a SEP-IRA), or to purchase U.S. savings bonds instead of receiving a paper check.

Alternative Minimum Tax (AMT)

This section briefly discusses an additional tax you may have to pay.

The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Tax-payers who benefit from this special treatment may have to pay at least a minimum amount of tax through an additional tax called AMT.

You may have to pay the AMT if your taxa-ble income for regular tax purposes, combined with certain adjustments and tax preference items, is more than a certain amount. See Form 6251, Alternative Minimum Tax—Individuals.

Adjustments and tax preference items. The more common adjustments and tax preference items include:

Addition of the standard deduction (if claimed);

Addition of itemized deductions claimed for state and local taxes and certain inter-est;

Subtraction of any refund of state and local taxes included in gross income;

Changes to accelerated depreciation of certain property;

Difference between gain or loss on the sale of property reported for regular tax purposes and AMT purposes;

Addition of certain income from incentive stock options;

Change in certain passive activity loss de-ductions;

Addition of certain depletion that is more than the adjusted basis of the property;

Addition of part of the deduction for certain intangible drilling costs; and

Addition of tax-exempt interest on certain private activity bonds.

More information. For more information about the AMT, see the Instructions for Form 6251.

Chapter 13How To Figure Your TaxPage 105

Tax Figured by IRS

If you file by the due date of your return (not counting extensions) — April 15, 2021, for most people — you can have the IRS figure your tax for you on Form 1040 or 1040-SR.

If the IRS figures your tax and you paid too much, you will receive a refund. If you didn’t pay enough, you will receive a bill for the balance. To avoid interest or the penalty for late pay-ment, you must pay the bill within 30 days of the date of the bill or by the due date for your return, whichever is later.

The IRS can also figure the credit for the elderly or the disabled and the earned income credit for you.

When the IRS cannot figure your tax. The IRS can’t figure your tax for you if any of the fol-lowing apply.

1. You want your refund directly deposited into your checking or savings account.

2. You want any part of your refund applied to your 2021 estimated tax.

3. You had income for the year from sources other than wages, salaries, tips, interest, dividends, taxable social security benefits, unemployment compensation, IRA distri-butions, pensions, and annuities.

4. Your taxable income is $100,000 or more.

5. You itemize deductions.

6. You file any of the following forms.

a. Form 2555, Foreign Earned Income.

b. Form 4137, Social Security and Medi-care Tax on Unreported Tip Income.

c. Form 4970, Tax on Accumulation Dis-tribution of Trusts.

d. Form 4972, Tax on Lump-Sum Distri-butions.

e. Form 6198, At-Risk Limitations.

f. Form 6251, Alternative Minimum Tax—Individuals.

g. Form 8606, Nondeductible IRAs.

h. Form 8615, Tax for Certain Children Who Have Unearned Income.

i. Form 8814, Parents' Election To Re-port Child's Interest and Dividends.

j. Form 8839, Qualified Adoption Ex-penses.

k. Form 8853, Archer MSAs and Long-Term Care Insurance Contracts.

l. Form 8889, Health Savings Accounts (HSAs).

m. Form 8919, Uncollected Social Secur-ity and Medicare Tax on Wages.

Filing the Return

After you complete the line entries for the tax form you are filing, fill in your name and ad-dress. Enter your social security number in the space provided. If you are married, enter the social security numbers of you and your

spouse, even if you file separately. Sign and date your return and enter your occupation(s). If you are filing a joint return, both you and your spouse must sign it. Enter your daytime phone number in the space provided. This may help speed the processing of your return if we have a question that can be answered over the phone. If you are filing a joint return, you may enter ei-ther your or your spouse's daytime phone num-ber.

If you want to allow a friend, family member, or any other person you choose to discuss your 2020 tax return with the IRS, check the box in the “Third party designee” area on your return. Also, enter the designee's name, phone num-ber, and any five digits the designee chooses as his or her personal identification number (PIN). If you check the “Yes” box, you, and your spouse if filing a joint return, are authorizing the IRS to call the designee to answer any ques-tions that may arise during the processing of your return.

Fill in and attach any schedules and forms asked for on the lines you completed to your paper return. Attach a copy of each of your Forms W-2 to your paper return. Also, attach to your paper return any Form 1099-R you re-ceived that has withholding tax in box 4.

Mail your return to the Internal Revenue Service Center for the area where you live. A list of Service Center addresses is in the instruc-tions for your tax return.

Form 1040 or 1040-SR Line Entries

If you want the IRS to figure your tax. Read Form 1040 or 1040-SR, lines 1 through 15, and Schedule 1 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedule 1 (Form 1040), if applicable. Don’t complete Form 1040 or 1040-SR, line 16 or 17.

If you are filing a joint return, use the space on the dotted line next to the words “Adjusted Gross Income” on the first page of your return to separately show your taxable income and your spouse's taxable income.

Read Form 1040 or 1040-SR, lines 19 through 33, and Schedules 2 and 3 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedules 2 and 3 (Form 1040), if applicable. Don’t fill in Form 1040 or 1040-SR, lines 22, 24, 33, or 34 through 38. Don’t fill in Schedule 2 (Form 1040), line 1 or 3. Also, don’t complete Schedule 3 (Form 1040), line 6, box “c” if you are completing Schedule R (Form 1040), or Form 1040 or 1040-SR, line 27, if you want the IRS to figure the credits shown on those lines.

Payments. Enter any federal income tax with-held that is shown on Form W -2, box 2, or Form 1099, box 4, on Form 1040 or 1040-SR, line 25. Enter any estimated tax payments you made on Form 1040 or 1040-SR, line 26.

Credit for child and dependent care expen-ses. If you can take this credit, complete Form 2441 and attach it to your paper return. Enter the amount of the credit on Schedule 3 (Form 1040), line 2. The IRS will not figure this credit.

Net premium tax credit. If you take this credit, complete Form 8962, Premium Tax Credit (PTC), and attach it to your return. Enter the

amount of the credit on Schedule 3 (Form 1040), line 8. The IRS will not figure this credit.

Credit for the elderly or the disabled. If you can take this credit, the IRS can figure it for you. Enter “CFE” on the line next to Schedule 3 (Form 1040), line 6, box “c” and attach Sched-ule R (Form 1040) to your paper return. On Schedule R (Form 1040), check the box in Part I for your filing status and age. Complete Parts II and III, lines 11 and 13, if they apply.

Earned income credit. If you can take this credit, the IRS can figure it for you. Enter “EIC” on the dotted line on Form 1040 or 1040-SR, line 27. If you elect to use your nontaxable com-bat pay in figuring your EIC, enter “NCP” and the amount on the dotted line on Form 1040 or 1040-SR, line 27.

If you have a qualifying child, you must fill in Schedule EIC (Form 1040), Earned Income Credit, and attach it to your paper return. If you don’t provide the child's social security number on Schedule EIC, line 2, the credit will be re-duced or disallowed unless the child was born and died in 2020.

If your credit for any year after 1996 was re-duced or disallowed by the IRS, you may also have to file Form 8862 with your return. For de-tails, see the Instructions for Forms 1040 and 1040-SR.

14.

Child Tax Credit

and Credit for

Other

Dependents

Reminders

Abbreviations used throughout this chap-ter. The following abbreviations will be used in this chapter when appropriate.

ACTC means additional child tax credit.

ATIN means adoption taxpayer identifica-tion number.

CTC means child tax credit.

ITIN means individual taxpayer identifica-tion number.

ODC means credit for other dependents.

SSN means social security number.

TIN means taxpayer identification number.

Other abbreviations may be used in this chapter and will be defined as needed.

Delayed refund for returns claiming the EIC or ACTC. The IRS can’t issue refunds before mid-February 2021 for returns that properly

Page 106Chapter 14Child Tax Credit and Credit for Other Dependents

claim the earned income credit (EIC) or the ACTC. This time frame applies to the entire re-fund, not just the portion associated with these credits.

Introduction

The CTC is a credit that may reduce your tax by as much as $2,000 for each child who qualifies you for the credit. See Limits on the CTC and ODC, later.

The ACTC is a credit you may be able to take if you are not able to claim the full amount of the CTC.

The ODC is a credit that may reduce your tax by as much as $500 for each eligible de-pendent.

The CTC and the ACTC shouldn’t be

confused with the child and dependent CAUTION care credit discussed in Pub. 503, Child and Dependent Care Expenses.

If you have no tax. Credits, such as the CTC, the ODC, or the child and dependent care credit, reduce your tax. If your tax on line 18 of your Form 1040 or 1040-SR is zero, you can't claim the child tax credit because there is no tax to reduce. However, you may qualify for the ACTC on line 28 of your Form 1040 or 1040-SR.

Useful Items

You may want to see:

Publication

972 Child Tax Credit and Credit for Other Dependents

Form (and Instructions)

Schedule 8812 (Form 1040) Additional Child Tax Credit

8862 Information To Claim Certain Credits After Disallowance

For these and other useful items, go to IRS.gov/ Forms.

Taxpayer Identification Number Requirements

You must have a TIN by the due date of your return. If you, or your spouse if filing jointly, don’t have an SSN or ITIN issued on or before the due date of your 2020 return (includ-ing extensions), you can’t claim the CTC, ODC, or ACTC on either your original or amended 2020 tax return.

If you apply for an ITIN on or before the due date of your 2020 return (including extensions) and the IRS issues you an ITIN as a result of the application, the IRS will consider your ITIN as issued on or before the due date of your return.

Each qualifying child you use for CTC or ACTC must have the required SSN. If you have a qualifying child who doesn’t have the re-quired SSN, you can’t use the child to claim the CTC or ACTC on either your original or amen-ded 2020 tax return. The required SSN is one that is valid for employment and is issued be-

fore the due date of your 2020 return (including extensions).

If your qualifying child doesn’t have the re-quired SSN but has another type of TIN issued on or before the due date of your 2020 return (including extensions), you may be able to claim the ODC for that child. See Credit for Other Dependents (ODC), later.

Each dependent you use for the ODC must have a TIN by the due date of your return. If you have a dependent who doesn’t have an SSN, ITIN, or ATIN issued on or before the due date of your 2020 return (including extensions), you can’t use that dependent to claim the ODC on either your original or amended 2020 tax re-turn.

If you apply for an ITIN or ATIN for the de-pendent on or before the due date of your 2020 return (including extensions) and the IRS issues the ITIN or ATIN as a result of the application, the IRS will consider the ITIN or ATIN as issued on or before the due date of your return.

Improper Claims

If you erroneously claim the CTC, ODC, or ACTC, even though you are not eligible for the credit and it is later determined that your error was due to reckless or intentional disregard of the CTC, ODC, or ACTC rules, you will not be allowed to claim any of these credits for 2 years. If it is determined that your error was due to fraud, you will not be allowed to claim any of these credits for 10 years. You may also have to pay penalties.

Form 8862 may be required. If your CTC, ODC, or ACTC for a year after 2015 was denied or reduced for any reason other than a math or clerical error, you must attach Form 8862 to your tax return to claim the CTC, ACTC, or ODC, unless an exception applies. See Form 8862 and its instructions for more information, including whether an exception applies.

Child Tax Credit (CTC)

The CTC is for individuals who claim a child as a dependent if the child meets additional condi-tions (described later).

Note. This credit is different from and in ad-dition to the credit for child and dependent care expenses and the earned income credit that you may also be eligible to claim.

The maximum amount you can claim for the credit is $2,000 for each child who qualifies you for the CTC. But, see Limits on the CTC and ODC, later.

For more information about claiming the CTC, see Claiming the CTC and ODC, later.

Qualifying Child for the CTC

A child qualifies you for the CTC if the child meets all of the following conditions.

1. The child is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a

descendant of any of them (for example, your grandchild, niece, or nephew).

2. The child was under age 17 at the end of 2020.

3. The child didn’t provide over half of his or her own support for 2020.

4. The child lived with you for more than half of 2020 (see Exceptions to time lived with you, later).

5. The child is claimed as a dependent on your return. See chapter 3 for more infor-mation about claiming someone as a de-pendent.

6. The child doesn’t file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid).

7. The child was a U.S. citizen, U.S. national, or U.S. resident alien. For more informa-tion, see Pub. 519, U.S. Tax Guide for Ali-ens. If the child was adopted, see Adopted child, later.

Example. Your son turned 17 on Decem-ber 30, 2020. He is a citizen of the United States and you claimed him as a dependent on your return. You can't use him to claim the CTC because he was not under age 17 at the end of 2020.

If your child is age 17 or older at the TIP end of 2020, see Credit for Other De-

pendents (ODC), later.

Adopted child. An adopted child is always treated as your own child. An adopted child in-cludes a child lawfully placed with you for legal adoption.

If you are a U.S. citizen or U.S. national and your adopted child lived with you all year as a member of your household in 2020, that child meets condition (7), earlier, to be a qualifying child for the child tax credit (or condition (3), later, to be a qualifying person for the ODC).

Exceptions to time lived with you. A child is considered to have lived with you for more than half of 2020 if the child was born or died in 2020 and your home was this child's home for more than half the time he or she was alive. Tempo-rary absences by you or the child for special cir-cumstances, such as school, vacation, busi-ness, medical care, military service, or detention in a juvenile facility, count as time the child lived with you.

There are also exceptions for kidnapped children and children of divorced or separated parents. For details, see Residency Test in chapter 3.

Qualifying child of more than one person. A special rule applies if your qualifying child is the qualifying child of more than one person. For details, see Qualifying Child of More Than One Person in chapter 3.

Required SSN

In addition to being a qualifying child for the CTC, your child must have the required SSN. The required SSN is one that is valid for em-ployment and that is issued by the Social

Chapter 14Child Tax Credit and Credit for Other DependentsPage 107

Security Administration before the due date of your 2020 return (including extensions).

If your qualifying child does not have TIP the required SSN, see Credit for Other

Dependents (ODC), later.

If your child was a U.S. citizen when the child received the SSN, the SSN is valid for em-ployment. If “Not Valid for Employment” is prin-ted on your child’s social security card and your child’s immigration status has changed so that your child is now a U.S. citizen or permanent resident, ask the SSA for a new social security card without the legend. However, if “Valid for Work Only With DHS Authorization” is printed on your child’s social security card, your child has the required SSN only as long as the De-partment of Homeland Security (DHS) authori-zation is valid.

If your child doesn’t have the required SSN, you can't use the child to claim the CTC (or ACTC) on either your original or amended 2020 tax return.

Credit for Other Dependents (ODC)

This credit is for individuals with a dependent who meets additional conditions (described later).

Note. This credit is different from and in ad-dition to the credit for child and dependent care expenses that you may also be eligible to claim.

The maximum amount you can claim for this credit is $500 for each qualifying dependent. See Limits on the CTC and ODC, later.

For more information about claiming the ODC, see Claiming the CTC and ODC, later.

Qualifying Person for the ODC

A person qualifies you for the ODC if the person meets all of the following conditions.

1. The person is claimed as a dependent on your return. See chapter 3 for more infor-mation about claiming someone as a de-pendent.

2. The person can’t be used by you to claim the CTC or ACTC. See Child Tax Credit (CTC), earlier.

3. The person was a U.S. citizen, U.S. na-tional, or U.S. resident alien. For more in-formation, see Pub. 519. If the person is your adopted child, see Adopted child, earlier.

Example. Your 10-year-old nephew lives in Mexico and qualifies as your dependent. He is not a U.S. citizen, U.S. national, or U.S. resident alien. You can’t use him to claim the ODC.

You can’t use the same child to claim

both the CTC (or ACTC) and the ODC.

CAUTION

Timely Issued TIN

In addition to being a qualifying person for the ODC, the person must have an SSN, ITIN, or ATIN issued to the dependent on or before the due date of your 2020 return (including exten-sions). If the person has not been issued an SSN, ITIN, or ATIN by that date, you can’t use the person to claim the ODC. For more informa-tion, see Taxpayer Identification Number Re-quirements, earlier.

Limits on the CTC and ODC

The maximum credit amount of your CTC or ODC may be reduced if either (1) or (2) applies.

1. The amount on line 18 of your Form 1040, 1040-SR, or 1040-NR is less than the total of both credits. If this amount is zero, you can't take either credit because there is no tax to reduce. But you may be able to take the ACTC if you are claiming the CTC (you can’t take ACTC if you are claiming only the ODC). See Additional Child Tax Credit (ACTC), later.

2. Your modified adjusted gross income (AGI) is more than the amount shown be-low for your filing status.

a. Married filing jointly — $400,000.

b. All other filing statuses — $200,000.

Modified AGI. For purposes of the CTC and ODC, your modified AGI is your AGI plus the following amounts that may apply to you.

Any amount excluded from income be-cause of the exclusion of income from Puerto Rico. On the dotted line next to Form 1040 or 1040-SR, line 11, enter the amount excluded and identify it as “EPRI.” Also attach a copy of any Form(s)

499R-2/W-2PR to your return.

Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.

Any amount on line 15 of Form 4563, Ex-clusion of Income for Bona Fide Residents of American Samoa.

If you don't have any of the above, your modi-fied AGI is the same as your AGI.

AGI. Your AGI is the amount on line 11 of your Form 1040, 1040-SR, or 1040-NR.

Claiming the CTC and ODC

To claim the CTC or ODC, be sure you meet the following requirements.

You must file Form 1040, 1040-SR, or

1040-NR and include the name and TIN of each dependent for whom you are claim-ing the CTC or ODC.

You must file Form 8862, if applicable. See Improper Claims, earlier.

You must enter a timely issued TIN on your tax return for you and your spouse (if filing

jointly). See Taxpayer Identification Num-ber Requirements, earlier.

For each qualifying child under 17 for whom you are claiming the CTC, you must enter the required SSN for the child in col-umn (2) of the Dependents section of your tax return and check the Child tax credit box in column (4). See Child Tax Credit (CTC), earlier.

For each dependent for whom you are claiming the ODC, you must enter the timely issued TIN for the dependent in col-umn (2) of the Dependents section of your tax return and check the Credit for other dependents box in column (4). See Credit for Other Dependents (ODC), earlier.

Don't check both the Child tax credit

box and the Credit for other depend-CAUTION ents box for the same person.

Additional Child Tax Credit (ACTC)

This credit is for certain individuals who get less than the full amount of the CTC. The ACTC may give you a refund even if you don't owe any tax.

The ODC can’t be used to figure the

ACTC. Only your CTC can be used to CAUTION figure your ACTC. If you are claiming the ODC but not the CTC, you can’t claim the ACTC.

Foreign earned income. If you file Form 2555 (relating to foreign earned income), you can’t claim the ACTC.

How to claim the ACTC. To claim the addi-tional child tax credit, follow the steps below.

1. Be sure you figured the amount, if any, of your CTC and your ODC using the appro-priate Child Tax Credit and Credit for Other Dependents Worksheet.

2. If you answered “Yes” on line 11 or line 12 of the Child Tax Credit and Credit for Other Dependents Worksheet in your tax return instructions or line 16 of the Child Tax Credit and Credit for Other Depend-ents Worksheet in Pub. 972, and line 1 of that worksheet is more than zero, use Schedule 8812 to see if you can claim the ACTC.

3. If you have an ACTC on line 15 of Sched-ule 8812, carry it to line 28 of your Form 1040, 1040-SR, or 1040-NR.

4. For each qualifying child under 17 for whom you are claiming the ACTC, be sure to enter the required SSN for the child in column (2) of the Dependents section of your tax return and check the Child tax credit box in column (4).

If the amount on line 1 of your Child TIP Tax Credit and Credit for Other De-pendents Worksheet is zero, your ACTC is also zero. You don’t need to complete

Schedule 8812.

Page 108Chapter 14Child Tax Credit and Credit for Other Dependents

2020

!	See the instructions for line 11a to see if you must use the Tax Table
	below to figure your tax.

Sample Table

Tax Table

CAUTION

Example. Mr. and Mrs. Brown are filing a joint return. Their taxable income on Form 1040, line 15, is $25,300. First, they find the $25,300–25,350 taxable income line. Next, they find the column for married filing jointly and read down the column. The amount shown where the taxable income line and filing status column meet is $2,644. This is the tax amount they should enter in the entry space on Form 1040, line 16.

AtBut

LeastLess Than

25,200 25,250

25,250 25,300

25,300 25,350

25,350 25,400

Single

2,830

2,836

2,842

2,848

Married Married Head

ling ling of a jointly* sepa- house-

ratelyhold

Your tax is—

2,6322,8302,745

2,6382,8362,751

2,6442,8422,757

2,6502,8482,763

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
0	5	0	0	0	0
5	15	1	1	1	1
15	25	2	2	2	2
25	50	4	4	4	4
50	75	6	6	6	6
75	100	9	9	9	9
100	125	11	11	11	11
125	150	14	14	14	14
150	175	16	16	16	16
175	200	19	19	19	19
200	225	21	21	21	21
225	250	24	24	24	24
250	275	26	26	26	26
275	300	29	29	29	29
300	325	31	31	31	31
325	350	34	34	34	34
350	375	36	36	36	36
375	400	39	39	39	39
400	425	41	41	41	41
425	450	44	44	44	44
450	475	46	46	46	46
475	500	49	49	49	49
500	525	51	51	51	51
525	550	54	54	54	54
550	575	56		56
			56		56
575	600	59	59	59	59
600	625	61	61	61	61
625	650	64		64
			64		64
650	675	66		66
			66		66
675	700	69	69	69	69
700	725	71	71	71	71
725	750	74	74	74	74
750	775	76	76	76	76
775	800	79	79	79	79
800	825	81		81
			81		81
825	850	84	84	84	84
850	875	86	86	86	86
875	900	89		89
			89		89
900	925	91		91
			91		91
925	950	94		94
			94		94
950	975	96	96	96	96
975	1,000	99		99
			99		99

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
1,000
1,000	1,025	101	101	101	101
1,025	1,050	104	104	104	104
1,050	1,075	106	106	106	106
1,075	1,100	109	109	109	109
1,100	1,125	111	111	111	111
1,125	1,150	114	114	114	114
1,150	1,175	116	116	116	116
1,175	1,200	119	119	119	119
1,200	1,225	121	121	121	121
1,225	1,250	124	124	124	124
1,250	1,275	126	126	126	126
1,275	1,300	129	129	129	129
1,300	1,325	131	131	131	131
1,325	1,350	134	134	134	134
1,350	1,375	136	136	136	136
1,375	1,400	139	139	139	139
1,400	1,425	141	141	141	141
1,425	1,450	144	144	144	144
1,450	1,475	146	146	146	146
1,475	1,500	149		149
			149		149
1,500	1,525	151	151	151	151
1,525	1,550	154	154	154	154
1,550	1,575	156	156	156	156
1,575	1,600	159		159
			159		159
1,600	1,625	161	161	161	161
1,625	1,650	164	164	164	164
1,650	1,675	166	166	166	166
1,675	1,700	169		169
			169		169
1,700	1,725	171		171
			171		171
1,725	1,750	174	174	174	174
1,750	1,775	176	176	176	176
1,775	1,800	179	179	179	179
1,800	1,825	181		181
			181		181
1,825	1,850	184	184	184	184
1,850	1,875	186	186	186	186
1,875	1,900	189		189
			189		189
1,900	1,925	191		191
			191		191
1,925	1,950	194		194
			194		194
1,950	1,975	196		196
			196		196
1,975	2,000	199		199
			199		199

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
2,000
2,000	2,025	201	201	201	201
2,025	2,050	204	204	204	204
2,050	2,075	206	206	206	206
2,075	2,100	209	209	209	209
2,100	2,125	211	211	211	211
2,125	2,150	214	214	214	214
2,150	2,175	216	216	216	216
2,175	2,200	219	219	219	219
2,200	2,225	221	221	221	221
2,225	2,250	224	224	224	224
2,250	2,275	226	226	226	226
2,275	2,300	229	229	229	229
2,300	2,325	231	231	231	231
2,325	2,350	234	234	234	234
2,350	2,375	236	236	236	236
2,375	2,400	239	239	239	239
2,400	2,425	241	241	241	241
2,425	2,450	244	244	244	244
2,450	2,475	246	246	246	246
2,475	2,500	249		249
			249		249
2,500	2,525	251	251	251	251
2,525	2,550	254	254	254	254
2,550	2,575	256	256	256	256
2,575	2,600	259		259
			259		259
2,600	2,625	261	261	261	261
2,625	2,650	264	264	264	264
2,650	2,675	266	266	266	266
2,675	2,700	269		269
			269		269
2,700	2,725	271		271
			271		271
2,725	2,750	274	274	274	274
2,750	2,775	276	276	276	276
2,775	2,800	279	279	279	279
2,800	2,825	281		281
			281		281
2,825	2,850	284	284	284	284
2,850	2,875	286	286	286	286
2,875	2,900	289		289
			289		289
2,900	2,925	291		291
			291		291
2,925	2,950	294		294
			294		294
2,950	2,975	296		296
			296		296
2,975	3,000	299		299
			299		299

(Continued)

* This column must also be used by a qualifying widow(er).

-109-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
3,000
3,000	3,050	303	303	303	303
3,050	3,100	308	308	308	308
3,100	3,150	313	313	313	313
3,150	3,200	318	318	318	318
3,200	3,250	323	323	323	323
3,250	3,300	328	328	328	328
3,300	3,350	333	333	333	333
3,350	3,400	338	338	338	338
3,400	3,450	343	343	343	343
3,450	3,500	348	348	348	348
3,500	3,550	353	353	353	353
3,550	3,600	358	358	358	358
3,600	3,650	363	363	363	363
3,650	3,700	368	368	368	368
3,700	3,750	373	373	373	373
3,750	3,800	378	378	378	378
3,800	3,850	383	383	383	383
3,850	3,900	388	388	388	388
3,900	3,950	393	393	393	393
3,950	4,000	398		398
			398		398
4,000
4,000	4,050	403	403	403	403
4,050	4,100	408	408	408	408
4,100	4,150	413	413	413	413
4,150	4,200	418	418	418	418
4,200	4,250	423		423
			423		423
4,250	4,300	428	428	428	428
4,300	4,350	433	433	433	433
4,350	4,400	438	438	438	438
4,400	4,450	443		443
			443		443
4,450	4,500	448	448	448	448
4,500	4,550	453	453	453	453
4,550	4,600	458	458	458	458
4,600	4,650	463	463	463	463
4,650	4,700	468		468
			468		468
4,700	4,750	473	473	473	473
4,750	4,800	478	478	478	478
4,800	4,850	483	483	483	483
4,850	4,900	488		488
			488		488
4,900	4,950	493	493	493	493
4,950	5,000	498	498	498	498
5,000
5,000	5,050	503	503	503	503
5,050	5,100	508	508	508	508
5,100	5,150	513		513
			513		513
5,150	5,200	518	518	518	518
5,200	5,250	523	523	523	523
5,250	5,300	528		528
			528		528
5,300	5,350	533		533
			533		533
5,350	5,400	538	538	538	538
5,400	5,450	543		543
			543		543
5,450	5,500	548		548
			548		548
5,500	5,550	553		553
			553		553
5,550	5,600	558		558
			558		558
5,600	5,650	563	563	563
					563
5,650	5,700	568		568
			568		568
5,700	5,750	573		573
			573		573
5,750	5,800	578		578
			578		578
5,800	5,850	583		583
			583		583
5,850	5,900	588		588
			588		588
5,900	5,950	593		593
			593		593
5,950	6,000	598		598
			598		598

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
6,000
6,000	6,050	603	603	603	603
6,050	6,100	608	608	608	608
6,100	6,150	613	613	613	613
6,150	6,200	618	618	618	618
6,200	6,250	623	623	623	623
6,250	6,300	628	628	628	628
6,300	6,350	633	633	633	633
6,350	6,400	638	638	638	638
6,400	6,450	643	643	643	643
6,450	6,500	648	648	648	648
6,500	6,550	653	653	653	653
6,550	6,600	658	658	658	658
6,600	6,650	663	663	663	663
6,650	6,700	668	668	668	668
6,700	6,750	673	673	673	673
6,750	6,800	678	678	678	678
6,800	6,850	683	683	683	683
6,850	6,900	688	688	688	688
6,900	6,950	693	693	693	693
6,950	7,000	698		698
			698		698
7,000
7,000	7,050	703	703	703	703
7,050	7,100	708	708	708	708
7,100	7,150	713	713	713	713
7,150	7,200	718	718	718	718
7,200	7,250	723		723
			723		723
7,250	7,300	728	728	728	728
7,300	7,350	733	733	733	733
7,350	7,400	738	738	738	738
7,400	7,450	743		743
			743		743
7,450	7,500	748	748	748	748
7,500	7,550	753	753	753	753
7,550	7,600	758	758	758	758
7,600	7,650	763	763	763	763
7,650	7,700	768		768
			768		768
7,700	7,750	773	773	773	773
7,750	7,800	778	778	778	778
7,800	7,850	783	783	783	783
7,850	7,900	788		788
			788		788
7,900	7,950	793	793	793	793
7,950	8,000	798	798	798	798
8,000
8,000	8,050	803	803	803	803
8,050	8,100	808	808	808	808
8,100	8,150	813		813
			813		813
8,150	8,200	818	818	818	818
8,200	8,250	823	823	823	823
8,250	8,300	828		828
			828		828
8,300	8,350	833		833
			833		833
8,350	8,400	838	838	838	838
8,400	8,450	843		843
			843		843
8,450	8,500	848		848
			848		848
8,500	8,550	853		853
			853		853
8,550	8,600	858		858
			858		858
8,600	8,650	863	863	863
					863
8,650	8,700	868		868
			868		868
8,700	8,750	873		873
			873		873
8,750	8,800	878		878
			878		878
8,800	8,850	883		883
			883		883
8,850	8,900	888		888
			888		888
8,900	8,950	893		893
			893		893
8,950	9,000	898		898
			898		898

2020 Tax Table — Continued

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
9,000
9,000	9,050	903	903	903	903
9,050	9,100	908	908	908	908
9,100	9,150	913	913	913	913
9,150	9,200	918	918	918	918
9,200	9,250	923	923	923	923
9,250	9,300	928	928	928	928
9,300	9,350	933	933	933	933
9,350	9,400	938	938	938	938
9,400	9,450	943	943	943	943
9,450	9,500	948	948	948	948
9,500	9,550	953	953	953	953
9,550	9,600	958	958	958	958
9,600	9,650	963	963	963	963
9,650	9,700	968	968	968	968
9,700	9,750	973	973	973	973
9,750	9,800	978	978	978	978
9,800	9,850	983	983	983	983
9,850	9,900	988	988	988	988
9,900	9,950	994	993	994	993
9,950	10,000	1,000		1,000
			998		998
10,000
10,000	10,050	1,006	1,003	1,006	1,003
10,050	10,100	1,012	1,008	1,012	1,008
10,100	10,150	1,018	1,013	1,018	1,013
10,150	10,200	1,024	1,018	1,024	1,018
10,200	10,250	1,030		1,030
			1,023		1,023
10,250	10,300	1,036	1,028	1,036	1,028
10,300	10,350	1,042	1,033	1,042	1,033
10,350	10,400	1,048	1,038	1,048	1,038
10,400	10,450	1,054		1,054
			1,043		1,043
10,450	10,500	1,060	1,048	1,060	1,048
10,500	10,550	1,066	1,053	1,066	1,053
10,550	10,600	1,072	1,058	1,072	1,058
10,600	10,650	1,078	1,063	1,078	1,063
10,650	10,700	1,084		1,084
			1,068		1,068
10,700	10,750	1,090	1,073	1,090	1,073
10,750	10,800	1,096	1,078	1,096	1,078
10,800	10,850	1,102	1,083	1,102	1,083
10,850	10,900	1,108		1,108
			1,088		1,088
10,900	10,950	1,114	1,093	1,114	1,093
10,950	11,000	1,120	1,098	1,120	1,098
11,000
11,000	11,050	1,126	1,103	1,126	1,103
11,050	11,100	1,132	1,108	1,132	1,108
11,100	11,150	1,138		1,138
			1,113		1,113
11,150	11,200	1,144	1,118	1,144	1,118
11,200	11,250	1,150	1,123	1,150	1,123
11,250	11,300	1,156		1,156
			1,128		1,128
11,300	11,350	1,162		1,162
			1,133		1,133
11,350	11,400	1,168	1,138	1,168	1,138
11,400	11,450	1,174		1,174
			1,143		1,143
11,450	11,500	1,180		1,180
			1,148		1,148
11,500	11,550	1,186		1,186
			1,153		1,153
11,550	11,600	1,192		1,192
			1,158		1,158
11,600	11,650	1,198	1,163	1,198
					1,163
11,650	11,700	1,204		1,204
			1,168		1,168
11,700	11,750	1,210		1,210
			1,173		1,173
11,750	11,800	1,216		1,216
			1,178		1,178
11,800	11,850	1,222		1,222
			1,183		1,183
11,850	11,900	1,228		1,228
			1,188		1,188
11,900	11,950	1,234		1,234
			1,193		1,193
11,950	12,000	1,240		1,240
			1,198		1,198

(Continued)

* This column must also be used by a qualifying widow(er).

-110-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
12,000
12,000	12,050	1,246	1,203	1,246	1,203
12,050	12,100	1,252	1,208	1,252	1,208
12,100	12,150	1,258	1,213	1,258	1,213
12,150	12,200	1,264	1,218	1,264	1,218
12,200	12,250	1,270	1,223	1,270	1,223
12,250	12,300	1,276	1,228	1,276	1,228
12,300	12,350	1,282	1,233	1,282	1,233
12,350	12,400	1,288	1,238	1,288	1,238
12,400	12,450	1,294	1,243	1,294	1,243
12,450	12,500	1,300	1,248	1,300	1,248
12,500	12,550	1,306	1,253	1,306	1,253
12,550	12,600	1,312	1,258	1,312	1,258
12,600	12,650	1,318	1,263	1,318	1,263
12,650	12,700	1,324	1,268	1,324	1,268
12,700	12,750	1,330	1,273	1,330	1,273
12,750	12,800	1,336	1,278	1,336	1,278
12,800	12,850	1,342	1,283	1,342	1,283
12,850	12,900	1,348	1,288	1,348	1,288
12,900	12,950	1,354	1,293	1,354	1,293
12,950	13,000	1,360		1,360
			1,298		1,298
13,000
13,000	13,050	1,366	1,303	1,366	1,303
13,050	13,100	1,372	1,308	1,372	1,308
13,100	13,150	1,378	1,313	1,378	1,313
13,150	13,200	1,384	1,318	1,384	1,318
13,200	13,250	1,390		1,390
			1,323		1,323
13,250	13,300	1,396	1,328	1,396	1,328
13,300	13,350	1,402	1,333	1,402	1,333
13,350	13,400	1,408	1,338	1,408	1,338
13,400	13,450	1,414		1,414
			1,343		1,343
13,450	13,500	1,420	1,348	1,420	1,348
13,500	13,550	1,426	1,353	1,426	1,353
13,550	13,600	1,432	1,358	1,432	1,358
13,600	13,650	1,438	1,363	1,438	1,363
13,650	13,700	1,444		1,444
			1,368		1,368
13,700	13,750	1,450	1,373	1,450	1,373
13,750	13,800	1,456	1,378	1,456	1,378
13,800	13,850	1,462	1,383	1,462	1,383
13,850	13,900	1,468		1,468
			1,388		1,388
13,900	13,950	1,474	1,393	1,474	1,393
13,950	14,000	1,480	1,398	1,480	1,398
14,000
14,000	14,050	1,486	1,403	1,486	1,403
14,050	14,100	1,492	1,408	1,492	1,408
14,100	14,150	1,498		1,498
			1,413		1,413
14,150	14,200	1,504	1,418	1,504	1,419
14,200	14,250	1,510	1,423	1,510	1,425
14,250	14,300	1,516		1,516
			1,428		1,431
14,300	14,350	1,522		1,522
			1,433		1,437
14,350	14,400	1,528	1,438	1,528	1,443
14,400	14,450	1,534		1,534
			1,443		1,449
14,450	14,500	1,540		1,540
			1,448		1,455
14,500	14,550	1,546		1,546
			1,453		1,461
14,550	14,600	1,552		1,552
			1,458		1,467
14,600	14,650	1,558	1,463	1,558
					1,473
14,650	14,700	1,564		1,564
			1,468		1,479
14,700	14,750	1,570		1,570
			1,473		1,485
14,750	14,800	1,576		1,576
			1,478		1,491
14,800	14,850	1,582		1,582
			1,483		1,497
14,850	14,900	1,588		1,588
			1,488		1,503
14,900	14,950	1,594		1,594
			1,493		1,509
14,950	15,000	1,600		1,600
			1,498		1,515

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
15,000						18,000
15,000	15,050	1,606	1,503	1,606	1,521	18,000	18,050	1,966	1,803	1,966	1,881
15,050	15,100	1,612	1,508	1,612	1,527	18,050	18,100	1,972	1,808	1,972	1,887
15,100	15,150	1,618	1,513	1,618	1,533	18,100	18,150	1,978	1,813	1,978	1,893
15,150	15,200	1,624	1,518	1,624	1,539	18,150	18,200	1,984	1,818	1,984	1,899
15,200	15,250	1,630	1,523	1,630	1,545	18,200	18,250	1,990	1,823	1,990	1,905
15,250	15,300	1,636	1,528	1,636	1,551	18,250	18,300	1,996	1,828	1,996	1,911
15,300	15,350	1,642	1,533	1,642	1,557	18,300	18,350	2,002	1,833	2,002	1,917
15,350	15,400	1,648	1,538	1,648	1,563	18,350	18,400	2,008	1,838	2,008	1,923
15,400	15,450	1,654	1,543	1,654	1,569	18,400	18,450	2,014	1,843	2,014	1,929
15,450	15,500	1,660	1,548	1,660	1,575	18,450	18,500	2,020	1,848	2,020	1,935
15,500	15,550	1,666	1,553	1,666	1,581	18,500	18,550	2,026	1,853	2,026	1,941
15,550	15,600	1,672	1,558	1,672	1,587	18,550	18,600	2,032	1,858	2,032	1,947
15,600	15,650	1,678	1,563	1,678	1,593	18,600	18,650	2,038	1,863	2,038	1,953
15,650	15,700	1,684	1,568	1,684	1,599	18,650	18,700	2,044	1,868	2,044	1,959
15,700	15,750	1,690	1,573	1,690	1,605	18,700	18,750	2,050	1,873	2,050	1,965
15,750	15,800	1,696	1,578	1,696	1,611	18,750	18,800	2,056	1,878	2,056	1,971
15,800	15,850	1,702	1,583	1,702	1,617	18,800	18,850	2,062	1,883	2,062	1,977
15,850	15,900	1,708	1,588	1,708	1,623	18,850	18,900	2,068	1,888	2,068	1,983
15,900	15,950	1,714	1,593	1,714	1,629	18,900	18,950	2,074	1,893	2,074	1,989
15,950	16,000	1,720		1,720		18,950	19,000	2,080		2,080
			1,598		1,635				1,898		1,995
16,000						19,000
16,000	16,050	1,726	1,603	1,726	1,641	19,000	19,050	2,086	1,903	2,086	2,001
16,050	16,100	1,732	1,608	1,732	1,647	19,050	19,100	2,092	1,908	2,092	2,007
16,100	16,150	1,738	1,613	1,738	1,653	19,100	19,150	2,098	1,913	2,098	2,013
16,150	16,200	1,744	1,618	1,744	1,659	19,150	19,200	2,104	1,918	2,104	2,019
16,200	16,250	1,750		1,750		19,200	19,250	2,110		2,110
			1,623		1,665				1,923		2,025
16,250	16,300	1,756	1,628	1,756	1,671	19,250	19,300	2,116	1,928	2,116	2,031
16,300	16,350	1,762	1,633	1,762	1,677	19,300	19,350	2,122	1,933	2,122	2,037
16,350	16,400	1,768	1,638	1,768	1,683	19,350	19,400	2,128	1,938	2,128	2,043
16,400	16,450	1,774		1,774		19,400	19,450	2,134		2,134
			1,643		1,689				1,943		2,049
16,450	16,500	1,780	1,648	1,780	1,695	19,450	19,500	2,140	1,948	2,140	2,055
16,500	16,550	1,786	1,653	1,786	1,701	19,500	19,550	2,146	1,953	2,146	2,061
16,550	16,600	1,792	1,658	1,792	1,707	19,550	19,600	2,152	1,958	2,152	2,067
16,600	16,650	1,798	1,663	1,798	1,713	19,600	19,650	2,158	1,963	2,158	2,073
16,650	16,700	1,804		1,804		19,650	19,700	2,164		2,164
			1,668		1,719				1,968		2,079
16,700	16,750	1,810	1,673	1,810	1,725	19,700	19,750	2,170	1,973	2,170	2,085
16,750	16,800	1,816	1,678	1,816	1,731	19,750	19,800	2,176	1,978	2,176	2,091
16,800	16,850	1,822	1,683	1,822	1,737	19,800	19,850	2,182	1,984	2,182	2,097
16,850	16,900	1,828		1,828		19,850	19,900	2,188		2,188
			1,688		1,743				1,990		2,103
16,900	16,950	1,834	1,693	1,834	1,749	19,900	19,950	2,194	1,996	2,194	2,109
16,950	17,000	1,840	1,698	1,840	1,755	19,950	20,000	2,200	2,002	2,200	2,115
17,000						20,000
17,000	17,050	1,846	1,703	1,846	1,761	20,000	20,050	2,206	2,008	2,206	2,121
17,050	17,100	1,852	1,708	1,852	1,767	20,050	20,100	2,212	2,014	2,212	2,127
17,100	17,150	1,858		1,858		20,100	20,150	2,218		2,218
			1,713		1,773				2,020		2,133
17,150	17,200	1,864	1,718	1,864	1,779	20,150	20,200	2,224	2,026	2,224	2,139
17,200	17,250	1,870	1,723	1,870	1,785	20,200	20,250	2,230	2,032	2,230	2,145
17,250	17,300	1,876		1,876		20,250	20,300	2,236		2,236
			1,728		1,791				2,038		2,151
17,300	17,350	1,882		1,882		20,300	20,350	2,242		2,242
			1,733		1,797				2,044		2,157
17,350	17,400	1,888	1,738	1,888	1,803	20,350	20,400	2,248	2,050	2,248	2,163
17,400	17,450	1,894		1,894		20,400	20,450	2,254		2,254
			1,743		1,809				2,056		2,169
17,450	17,500	1,900		1,900		20,450	20,500	2,260		2,260
			1,748		1,815				2,062		2,175
17,500	17,550	1,906		1,906		20,500	20,550	2,266		2,266
			1,753		1,821				2,068		2,181
17,550	17,600	1,912		1,912		20,550	20,600	2,272		2,272
			1,758		1,827				2,074		2,187
17,600	17,650	1,918	1,763	1,918		20,600	20,650	2,278	2,080	2,278
					1,833						2,193
17,650	17,700	1,924		1,924		20,650	20,700	2,284		2,284
			1,768		1,839				2,086		2,199
17,700	17,750	1,930		1,930		20,700	20,750	2,290		2,290
			1,773		1,845				2,092		2,205
17,750	17,800	1,936		1,936		20,750	20,800	2,296		2,296
			1,778		1,851				2,098		2,211
17,800	17,850	1,942		1,942		20,800	20,850	2,302		2,302
			1,783		1,857				2,104		2,217
17,850	17,900	1,948		1,948		20,850	20,900	2,308		2,308
			1,788		1,863				2,110		2,223
17,900	17,950	1,954		1,954		20,900	20,950	2,314		2,314
			1,793		1,869				2,116		2,229
17,950	18,000	1,960		1,960		20,950	21,000	2,320		2,320
			1,798		1,875				2,122		2,235

(Continued)

* This column must also be used by a qualifying widow(er).

-111-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
21,000
21,000	21,050	2,326	2,128	2,326	2,241
21,050	21,100	2,332	2,134	2,332	2,247
21,100	21,150	2,338	2,140	2,338	2,253
21,150	21,200	2,344	2,146	2,344	2,259
21,200	21,250	2,350	2,152	2,350	2,265
21,250	21,300	2,356	2,158	2,356	2,271
21,300	21,350	2,362	2,164	2,362	2,277
21,350	21,400	2,368	2,170	2,368	2,283
21,400	21,450	2,374	2,176	2,374	2,289
21,450	21,500	2,380	2,182	2,380	2,295
21,500	21,550	2,386	2,188	2,386	2,301
21,550	21,600	2,392	2,194	2,392	2,307
21,600	21,650	2,398	2,200	2,398	2,313
21,650	21,700	2,404	2,206	2,404	2,319
21,700	21,750	2,410	2,212	2,410	2,325
21,750	21,800	2,416	2,218	2,416	2,331
21,800	21,850	2,422	2,224	2,422	2,337
21,850	21,900	2,428	2,230	2,428	2,343
21,900	21,950	2,434	2,236	2,434	2,349
21,950	22,000	2,440		2,440
			2,242		2,355
22,000
22,000	22,050	2,446	2,248	2,446	2,361
22,050	22,100	2,452	2,254	2,452	2,367
22,100	22,150	2,458	2,260	2,458	2,373
22,150	22,200	2,464	2,266	2,464	2,379
22,200	22,250	2,470		2,470
			2,272		2,385
22,250	22,300	2,476	2,278	2,476	2,391
22,300	22,350	2,482	2,284	2,482	2,397
22,350	22,400	2,488	2,290	2,488	2,403
22,400	22,450	2,494		2,494
			2,296		2,409
22,450	22,500	2,500	2,302	2,500	2,415
22,500	22,550	2,506	2,308	2,506	2,421
22,550	22,600	2,512	2,314	2,512	2,427
22,600	22,650	2,518	2,320	2,518	2,433
22,650	22,700	2,524		2,524
			2,326		2,439
22,700	22,750	2,530	2,332	2,530	2,445
22,750	22,800	2,536	2,338	2,536	2,451
22,800	22,850	2,542	2,344	2,542	2,457
22,850	22,900	2,548		2,548
			2,350		2,463
22,900	22,950	2,554	2,356	2,554	2,469
22,950	23,000	2,560	2,362	2,560	2,475
23,000
23,000	23,050	2,566	2,368	2,566	2,481
23,050	23,100	2,572	2,374	2,572	2,487
23,100	23,150	2,578		2,578
			2,380		2,493
23,150	23,200	2,584	2,386	2,584	2,499
23,200	23,250	2,590	2,392	2,590	2,505
23,250	23,300	2,596		2,596
			2,398		2,511
23,300	23,350	2,602		2,602
			2,404		2,517
23,350	23,400	2,608	2,410	2,608	2,523
23,400	23,450	2,614		2,614
			2,416		2,529
23,450	23,500	2,620		2,620
			2,422		2,535
23,500	23,550	2,626		2,626
			2,428		2,541
23,550	23,600	2,632		2,632
			2,434		2,547
23,600	23,650	2,638	2,440	2,638
					2,553
23,650	23,700	2,644		2,644
			2,446		2,559
23,700	23,750	2,650		2,650
			2,452		2,565
23,750	23,800	2,656		2,656
			2,458		2,571
23,800	23,850	2,662		2,662
			2,464		2,577
23,850	23,900	2,668		2,668
			2,470		2,583
23,900	23,950	2,674		2,674
			2,476		2,589
23,950	24,000	2,680		2,680
			2,482		2,595

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
24,000						27,000
24,000	24,050	2,686	2,488	2,686	2,601	27,000	27,050	3,046	2,848	3,046	2,961
24,050	24,100	2,692	2,494	2,692	2,607	27,050	27,100	3,052	2,854	3,052	2,967
24,100	24,150	2,698	2,500	2,698	2,613	27,100	27,150	3,058	2,860	3,058	2,973
24,150	24,200	2,704	2,506	2,704	2,619	27,150	27,200	3,064	2,866	3,064	2,979
24,200	24,250	2,710	2,512	2,710	2,625	27,200	27,250	3,070	2,872	3,070	2,985
24,250	24,300	2,716	2,518	2,716	2,631	27,250	27,300	3,076	2,878	3,076	2,991
24,300	24,350	2,722	2,524	2,722	2,637	27,300	27,350	3,082	2,884	3,082	2,997
24,350	24,400	2,728	2,530	2,728	2,643	27,350	27,400	3,088	2,890	3,088	3,003
24,400	24,450	2,734	2,536	2,734	2,649	27,400	27,450	3,094	2,896	3,094	3,009
24,450	24,500	2,740	2,542	2,740	2,655	27,450	27,500	3,100	2,902	3,100	3,015
24,500	24,550	2,746	2,548	2,746	2,661	27,500	27,550	3,106	2,908	3,106	3,021
24,550	24,600	2,752	2,554	2,752	2,667	27,550	27,600	3,112	2,914	3,112	3,027
24,600	24,650	2,758	2,560	2,758	2,673	27,600	27,650	3,118	2,920	3,118	3,033
24,650	24,700	2,764	2,566	2,764	2,679	27,650	27,700	3,124	2,926	3,124	3,039
24,700	24,750	2,770	2,572	2,770	2,685	27,700	27,750	3,130	2,932	3,130	3,045
24,750	24,800	2,776	2,578	2,776	2,691	27,750	27,800	3,136	2,938	3,136	3,051
24,800	24,850	2,782	2,584	2,782	2,697	27,800	27,850	3,142	2,944	3,142	3,057
24,850	24,900	2,788	2,590	2,788	2,703	27,850	27,900	3,148	2,950	3,148	3,063
24,900	24,950	2,794	2,596	2,794	2,709	27,900	27,950	3,154	2,956	3,154	3,069
24,950	25,000	2,800		2,800		27,950	28,000	3,160		3,160
			2,602		2,715				2,962		3,075
25,000						28,000
25,000	25,050	2,806	2,608	2,806	2,721	28,000	28,050	3,166	2,968	3,166	3,081
25,050	25,100	2,812	2,614	2,812	2,727	28,050	28,100	3,172	2,974	3,172	3,087
25,100	25,150	2,818	2,620	2,818	2,733	28,100	28,150	3,178	2,980	3,178	3,093
25,150	25,200	2,824	2,626	2,824	2,739	28,150	28,200	3,184	2,986	3,184	3,099
25,200	25,250	2,830		2,830		28,200	28,250	3,190		3,190
			2,632		2,745				2,992		3,105
25,250	25,300	2,836	2,638	2,836	2,751	28,250	28,300	3,196	2,998	3,196	3,111
25,300	25,350	2,842	2,644	2,842	2,757	28,300	28,350	3,202	3,004	3,202	3,117
25,350	25,400	2,848	2,650	2,848	2,763	28,350	28,400	3,208	3,010	3,208	3,123
25,400	25,450	2,854		2,854		28,400	28,450	3,214		3,214
			2,656		2,769				3,016		3,129
25,450	25,500	2,860	2,662	2,860	2,775	28,450	28,500	3,220	3,022	3,220	3,135
25,500	25,550	2,866	2,668	2,866	2,781	28,500	28,550	3,226	3,028	3,226	3,141
25,550	25,600	2,872	2,674	2,872	2,787	28,550	28,600	3,232	3,034	3,232	3,147
25,600	25,650	2,878	2,680	2,878	2,793	28,600	28,650	3,238	3,040	3,238	3,153
25,650	25,700	2,884		2,884		28,650	28,700	3,244		3,244
			2,686		2,799				3,046		3,159
25,700	25,750	2,890	2,692	2,890	2,805	28,700	28,750	3,250	3,052	3,250	3,165
25,750	25,800	2,896	2,698	2,896	2,811	28,750	28,800	3,256	3,058	3,256	3,171
25,800	25,850	2,902	2,704	2,902	2,817	28,800	28,850	3,262	3,064	3,262	3,177
25,850	25,900	2,908		2,908		28,850	28,900	3,268		3,268
			2,710		2,823				3,070		3,183
25,900	25,950	2,914	2,716	2,914	2,829	28,900	28,950	3,274	3,076	3,274	3,189
25,950	26,000	2,920	2,722	2,920	2,835	28,950	29,000	3,280	3,082	3,280	3,195
26,000						29,000
26,000	26,050	2,926	2,728	2,926	2,841	29,000	29,050	3,286	3,088	3,286	3,201
26,050	26,100	2,932	2,734	2,932	2,847	29,050	29,100	3,292	3,094	3,292	3,207
26,100	26,150	2,938		2,938		29,100	29,150	3,298		3,298
			2,740		2,853				3,100		3,213
26,150	26,200	2,944	2,746	2,944	2,859	29,150	29,200	3,304	3,106	3,304	3,219
26,200	26,250	2,950	2,752	2,950	2,865	29,200	29,250	3,310	3,112	3,310	3,225
26,250	26,300	2,956		2,956		29,250	29,300	3,316		3,316
			2,758		2,871				3,118		3,231
26,300	26,350	2,962		2,962		29,300	29,350	3,322		3,322
			2,764		2,877				3,124		3,237
26,350	26,400	2,968	2,770	2,968	2,883	29,350	29,400	3,328	3,130	3,328	3,243
26,400	26,450	2,974		2,974		29,400	29,450	3,334		3,334
			2,776		2,889				3,136		3,249
26,450	26,500	2,980		2,980		29,450	29,500	3,340		3,340
			2,782		2,895				3,142		3,255
26,500	26,550	2,986		2,986		29,500	29,550	3,346		3,346
			2,788		2,901				3,148		3,261
26,550	26,600	2,992		2,992		29,550	29,600	3,352		3,352
			2,794		2,907				3,154		3,267
26,600	26,650	2,998	2,800	2,998		29,600	29,650	3,358	3,160	3,358
					2,913						3,273
26,650	26,700	3,004		3,004		29,650	29,700	3,364		3,364
			2,806		2,919				3,166		3,279
26,700	26,750	3,010		3,010		29,700	29,750	3,370		3,370
			2,812		2,925				3,172		3,285
26,750	26,800	3,016		3,016		29,750	29,800	3,376		3,376
			2,818		2,931				3,178		3,291
26,800	26,850	3,022		3,022		29,800	29,850	3,382		3,382
			2,824		2,937				3,184		3,297
26,850	26,900	3,028		3,028		29,850	29,900	3,388		3,388
			2,830		2,943				3,190		3,303
26,900	26,950	3,034		3,034		29,900	29,950	3,394		3,394
			2,836		2,949				3,196		3,309
26,950	27,000	3,040		3,040		29,950	30,000	3,400		3,400
			2,842		2,955				3,202		3,315

(Continued)

* This column must also be used by a qualifying widow(er).

-112-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
30,000
30,000	30,050	3,406	3,208	3,406	3,321
30,050	30,100	3,412	3,214	3,412	3,327
30,100	30,150	3,418	3,220	3,418	3,333
30,150	30,200	3,424	3,226	3,424	3,339
30,200	30,250	3,430	3,232	3,430	3,345
30,250	30,300	3,436	3,238	3,436	3,351
30,300	30,350	3,442	3,244	3,442	3,357
30,350	30,400	3,448	3,250	3,448	3,363
30,400	30,450	3,454	3,256	3,454	3,369
30,450	30,500	3,460	3,262	3,460	3,375
30,500	30,550	3,466	3,268	3,466	3,381
30,550	30,600	3,472	3,274	3,472	3,387
30,600	30,650	3,478	3,280	3,478	3,393
30,650	30,700	3,484	3,286	3,484	3,399
30,700	30,750	3,490	3,292	3,490	3,405
30,750	30,800	3,496	3,298	3,496	3,411
30,800	30,850	3,502	3,304	3,502	3,417
30,850	30,900	3,508	3,310	3,508	3,423
30,900	30,950	3,514	3,316	3,514	3,429
30,950	31,000	3,520		3,520
			3,322		3,435
31,000
31,000	31,050	3,526	3,328	3,526	3,441
31,050	31,100	3,532	3,334	3,532	3,447
31,100	31,150	3,538	3,340	3,538	3,453
31,150	31,200	3,544	3,346	3,544	3,459
31,200	31,250	3,550		3,550
			3,352		3,465
31,250	31,300	3,556	3,358	3,556	3,471
31,300	31,350	3,562	3,364	3,562	3,477
31,350	31,400	3,568	3,370	3,568	3,483
31,400	31,450	3,574		3,574
			3,376		3,489
31,450	31,500	3,580	3,382	3,580	3,495
31,500	31,550	3,586	3,388	3,586	3,501
31,550	31,600	3,592	3,394	3,592	3,507
31,600	31,650	3,598	3,400	3,598	3,513
31,650	31,700	3,604		3,604
			3,406		3,519
31,700	31,750	3,610	3,412	3,610	3,525
31,750	31,800	3,616	3,418	3,616	3,531
31,800	31,850	3,622	3,424	3,622	3,537
31,850	31,900	3,628		3,628
			3,430		3,543
31,900	31,950	3,634	3,436	3,634	3,549
31,950	32,000	3,640	3,442	3,640	3,555
32,000
32,000	32,050	3,646	3,448	3,646	3,561
32,050	32,100	3,652	3,454	3,652	3,567
32,100	32,150	3,658		3,658
			3,460		3,573
32,150	32,200	3,664	3,466	3,664	3,579
32,200	32,250	3,670	3,472	3,670	3,585
32,250	32,300	3,676		3,676
			3,478		3,591
32,300	32,350	3,682		3,682
			3,484		3,597
32,350	32,400	3,688	3,490	3,688	3,603
32,400	32,450	3,694		3,694
			3,496		3,609
32,450	32,500	3,700		3,700
			3,502		3,615
32,500	32,550	3,706		3,706
			3,508		3,621
32,550	32,600	3,712		3,712
			3,514		3,627
32,600	32,650	3,718	3,520	3,718
					3,633
32,650	32,700	3,724		3,724
			3,526		3,639
32,700	32,750	3,730		3,730
			3,532		3,645
32,750	32,800	3,736		3,736
			3,538		3,651
32,800	32,850	3,742		3,742
			3,544		3,657
32,850	32,900	3,748		3,748
			3,550		3,663
32,900	32,950	3,754		3,754
			3,556		3,669
32,950	33,000	3,760		3,760
			3,562		3,675

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
33,000						36,000
33,000	33,050	3,766	3,568	3,766	3,681	36,000	36,050	4,126	3,928	4,126	4,041
33,050	33,100	3,772	3,574	3,772	3,687	36,050	36,100	4,132	3,934	4,132	4,047
33,100	33,150	3,778	3,580	3,778	3,693	36,100	36,150	4,138	3,940	4,138	4,053
33,150	33,200	3,784	3,586	3,784	3,699	36,150	36,200	4,144	3,946	4,144	4,059
33,200	33,250	3,790	3,592	3,790	3,705	36,200	36,250	4,150	3,952	4,150	4,065
33,250	33,300	3,796	3,598	3,796	3,711	36,250	36,300	4,156	3,958	4,156	4,071
33,300	33,350	3,802	3,604	3,802	3,717	36,300	36,350	4,162	3,964	4,162	4,077
33,350	33,400	3,808	3,610	3,808	3,723	36,350	36,400	4,168	3,970	4,168	4,083
33,400	33,450	3,814	3,616	3,814	3,729	36,400	36,450	4,174	3,976	4,174	4,089
33,450	33,500	3,820	3,622	3,820	3,735	36,450	36,500	4,180	3,982	4,180	4,095
33,500	33,550	3,826	3,628	3,826	3,741	36,500	36,550	4,186	3,988	4,186	4,101
33,550	33,600	3,832	3,634	3,832	3,747	36,550	36,600	4,192	3,994	4,192	4,107
33,600	33,650	3,838	3,640	3,838	3,753	36,600	36,650	4,198	4,000	4,198	4,113
33,650	33,700	3,844	3,646	3,844	3,759	36,650	36,700	4,204	4,006	4,204	4,119
33,700	33,750	3,850	3,652	3,850	3,765	36,700	36,750	4,210	4,012	4,210	4,125
33,750	33,800	3,856	3,658	3,856	3,771	36,750	36,800	4,216	4,018	4,216	4,131
33,800	33,850	3,862	3,664	3,862	3,777	36,800	36,850	4,222	4,024	4,222	4,137
33,850	33,900	3,868	3,670	3,868	3,783	36,850	36,900	4,228	4,030	4,228	4,143
33,900	33,950	3,874	3,676	3,874	3,789	36,900	36,950	4,234	4,036	4,234	4,149
33,950	34,000	3,880		3,880		36,950	37,000	4,240		4,240
			3,682		3,795				4,042		4,155
34,000						37,000
34,000	34,050	3,886	3,688	3,886	3,801	37,000	37,050	4,246	4,048	4,246	4,161
34,050	34,100	3,892	3,694	3,892	3,807	37,050	37,100	4,252	4,054	4,252	4,167
34,100	34,150	3,898	3,700	3,898	3,813	37,100	37,150	4,258	4,060	4,258	4,173
34,150	34,200	3,904	3,706	3,904	3,819	37,150	37,200	4,264	4,066	4,264	4,179
34,200	34,250	3,910		3,910		37,200	37,250	4,270		4,270
			3,712		3,825				4,072		4,185
34,250	34,300	3,916	3,718	3,916	3,831	37,250	37,300	4,276	4,078	4,276	4,191
34,300	34,350	3,922	3,724	3,922	3,837	37,300	37,350	4,282	4,084	4,282	4,197
34,350	34,400	3,928	3,730	3,928	3,843	37,350	37,400	4,288	4,090	4,288	4,203
34,400	34,450	3,934		3,934		37,400	37,450	4,294		4,294
			3,736		3,849				4,096		4,209
34,450	34,500	3,940	3,742	3,940	3,855	37,450	37,500	4,300	4,102	4,300	4,215
34,500	34,550	3,946	3,748	3,946	3,861	37,500	37,550	4,306	4,108	4,306	4,221
34,550	34,600	3,952	3,754	3,952	3,867	37,550	37,600	4,312	4,114	4,312	4,227
34,600	34,650	3,958	3,760	3,958	3,873	37,600	37,650	4,318	4,120	4,318	4,233
34,650	34,700	3,964		3,964		37,650	37,700	4,324		4,324
			3,766		3,879				4,126		4,239
34,700	34,750	3,970	3,772	3,970	3,885	37,700	37,750	4,330	4,132	4,330	4,245
34,750	34,800	3,976	3,778	3,976	3,891	37,750	37,800	4,336	4,138	4,336	4,251
34,800	34,850	3,982	3,784	3,982	3,897	37,800	37,850	4,342	4,144	4,342	4,257
34,850	34,900	3,988		3,988		37,850	37,900	4,348		4,348
			3,790		3,903				4,150		4,263
34,900	34,950	3,994	3,796	3,994	3,909	37,900	37,950	4,354	4,156	4,354	4,269
34,950	35,000	4,000	3,802	4,000	3,915	37,950	38,000	4,360	4,162	4,360	4,275
35,000						38,000
35,000	35,050	4,006	3,808	4,006	3,921	38,000	38,050	4,366	4,168	4,366	4,281
35,050	35,100	4,012	3,814	4,012	3,927	38,050	38,100	4,372	4,174	4,372	4,287
35,100	35,150	4,018		4,018		38,100	38,150	4,378		4,378
			3,820		3,933				4,180		4,293
35,150	35,200	4,024	3,826	4,024	3,939	38,150	38,200	4,384	4,186	4,384	4,299
35,200	35,250	4,030	3,832	4,030	3,945	38,200	38,250	4,390	4,192	4,390	4,305
35,250	35,300	4,036		4,036		38,250	38,300	4,396		4,396
			3,838		3,951				4,198		4,311
35,300	35,350	4,042		4,042		38,300	38,350	4,402		4,402
			3,844		3,957				4,204		4,317
35,350	35,400	4,048	3,850	4,048	3,963	38,350	38,400	4,408	4,210	4,408	4,323
35,400	35,450	4,054		4,054		38,400	38,450	4,414		4,414
			3,856		3,969				4,216		4,329
35,450	35,500	4,060		4,060		38,450	38,500	4,420		4,420
			3,862		3,975				4,222		4,335
35,500	35,550	4,066		4,066		38,500	38,550	4,426		4,426
			3,868		3,981				4,228		4,341
35,550	35,600	4,072		4,072		38,550	38,600	4,432		4,432
			3,874		3,987				4,234		4,347
35,600	35,650	4,078	3,880	4,078		38,600	38,650	4,438	4,240	4,438
					3,993						4,353
35,650	35,700	4,084		4,084		38,650	38,700	4,444		4,444
			3,886		3,999				4,246		4,359
35,700	35,750	4,090		4,090		38,700	38,750	4,450		4,450
			3,892		4,005				4,252		4,365
35,750	35,800	4,096		4,096		38,750	38,800	4,456		4,456
			3,898		4,011				4,258		4,371
35,800	35,850	4,102		4,102		38,800	38,850	4,462		4,462
			3,904		4,017				4,264		4,377
35,850	35,900	4,108		4,108		38,850	38,900	4,468		4,468
			3,910		4,023				4,270		4,383
35,900	35,950	4,114		4,114		38,900	38,950	4,474		4,474
			3,916		4,029				4,276		4,389
35,950	36,000	4,120		4,120		38,950	39,000	4,480		4,480
			3,922		4,035				4,282		4,395

(Continued)

* This column must also be used by a qualifying widow(er).

-113-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
39,000
39,000	39,050	4,486	4,288	4,486	4,401
39,050	39,100	4,492	4,294	4,492	4,407
39,100	39,150	4,498	4,300	4,498	4,413
39,150	39,200	4,504	4,306	4,504	4,419
39,200	39,250	4,510	4,312	4,510	4,425
39,250	39,300	4,516	4,318	4,516	4,431
39,300	39,350	4,522	4,324	4,522	4,437
39,350	39,400	4,528	4,330	4,528	4,443
39,400	39,450	4,534	4,336	4,534	4,449
39,450	39,500	4,540	4,342	4,540	4,455
39,500	39,550	4,546	4,348	4,546	4,461
39,550	39,600	4,552	4,354	4,552	4,467
39,600	39,650	4,558	4,360	4,558	4,473
39,650	39,700	4,564	4,366	4,564	4,479
39,700	39,750	4,570	4,372	4,570	4,485
39,750	39,800	4,576	4,378	4,576	4,491
39,800	39,850	4,582	4,384	4,582	4,497
39,850	39,900	4,588	4,390	4,588	4,503
39,900	39,950	4,594	4,396	4,594	4,509
39,950	40,000	4,600		4,600
			4,402		4,515
40,000
40,000	40,050	4,606	4,408	4,606	4,521
40,050	40,100	4,612	4,414	4,612	4,527
40,100	40,150	4,618	4,420	4,618	4,533
40,150	40,200	4,629	4,426	4,629	4,539
40,200	40,250	4,640		4,640
			4,432		4,545
40,250	40,300	4,651	4,438	4,651	4,551
40,300	40,350	4,662	4,444	4,662	4,557
40,350	40,400	4,673	4,450	4,673	4,563
40,400	40,450	4,684		4,684
			4,456		4,569
40,450	40,500	4,695	4,462	4,695	4,575
40,500	40,550	4,706	4,468	4,706	4,581
40,550	40,600	4,717	4,474	4,717	4,587
40,600	40,650	4,728	4,480	4,728	4,593
40,650	40,700	4,739		4,739
			4,486		4,599
40,700	40,750	4,750	4,492	4,750	4,605
40,750	40,800	4,761	4,498	4,761	4,611
40,800	40,850	4,772	4,504	4,772	4,617
40,850	40,900	4,783		4,783
			4,510		4,623
40,900	40,950	4,794	4,516	4,794	4,629
40,950	41,000	4,805	4,522	4,805	4,635
41,000
41,000	41,050	4,816	4,528	4,816	4,641
41,050	41,100	4,827	4,534	4,827	4,647
41,100	41,150	4,838		4,838
			4,540		4,653
41,150	41,200	4,849	4,546	4,849	4,659
41,200	41,250	4,860	4,552	4,860	4,665
41,250	41,300	4,871		4,871
			4,558		4,671
41,300	41,350	4,882		4,882
			4,564		4,677
41,350	41,400	4,893	4,570	4,893	4,683
41,400	41,450	4,904		4,904
			4,576		4,689
41,450	41,500	4,915		4,915
			4,582		4,695
41,500	41,550	4,926		4,926
			4,588		4,701
41,550	41,600	4,937		4,937
			4,594		4,707
41,600	41,650	4,948	4,600	4,948
					4,713
41,650	41,700	4,959		4,959
			4,606		4,719
41,700	41,750	4,970		4,970
			4,612		4,725
41,750	41,800	4,981		4,981
			4,618		4,731
41,800	41,850	4,992		4,992
			4,624		4,737
41,850	41,900	5,003		5,003
			4,630		4,743
41,900	41,950	5,014		5,014
			4,636		4,749
41,950	42,000	5,025		5,025
			4,642		4,755

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
42,000						45,000
42,000	42,050	5,036	4,648	5,036	4,761	45,000	45,050	5,696	5,008	5,696	5,121
42,050	42,100	5,047	4,654	5,047	4,767	45,050	45,100	5,707	5,014	5,707	5,127
42,100	42,150	5,058	4,660	5,058	4,773	45,100	45,150	5,718	5,020	5,718	5,133
42,150	42,200	5,069	4,666	5,069	4,779	45,150	45,200	5,729	5,026	5,729	5,139
42,200	42,250	5,080	4,672	5,080	4,785	45,200	45,250	5,740	5,032	5,740	5,145
42,250	42,300	5,091	4,678	5,091	4,791	45,250	45,300	5,751	5,038	5,751	5,151
42,300	42,350	5,102	4,684	5,102	4,797	45,300	45,350	5,762	5,044	5,762	5,157
42,350	42,400	5,113	4,690	5,113	4,803	45,350	45,400	5,773	5,050	5,773	5,163
42,400	42,450	5,124	4,696	5,124	4,809	45,400	45,450	5,784	5,056	5,784	5,169
42,450	42,500	5,135	4,702	5,135	4,815	45,450	45,500	5,795	5,062	5,795	5,175
42,500	42,550	5,146	4,708	5,146	4,821	45,500	45,550	5,806	5,068	5,806	5,181
42,550	42,600	5,157	4,714	5,157	4,827	45,550	45,600	5,817	5,074	5,817	5,187
42,600	42,650	5,168	4,720	5,168	4,833	45,600	45,650	5,828	5,080	5,828	5,193
42,650	42,700	5,179	4,726	5,179	4,839	45,650	45,700	5,839	5,086	5,839	5,199
42,700	42,750	5,190	4,732	5,190	4,845	45,700	45,750	5,850	5,092	5,850	5,205
42,750	42,800	5,201	4,738	5,201	4,851	45,750	45,800	5,861	5,098	5,861	5,211
42,800	42,850	5,212	4,744	5,212	4,857	45,800	45,850	5,872	5,104	5,872	5,217
42,850	42,900	5,223	4,750	5,223	4,863	45,850	45,900	5,883	5,110	5,883	5,223
42,900	42,950	5,234	4,756	5,234	4,869	45,900	45,950	5,894	5,116	5,894	5,229
42,950	43,000	5,245		5,245		45,950	46,000	5,905		5,905
			4,762		4,875				5,122		5,235
43,000						46,000
43,000	43,050	5,256	4,768	5,256	4,881	46,000	46,050	5,916	5,128	5,916	5,241
43,050	43,100	5,267	4,774	5,267	4,887	46,050	46,100	5,927	5,134	5,927	5,247
43,100	43,150	5,278	4,780	5,278	4,893	46,100	46,150	5,938	5,140	5,938	5,253
43,150	43,200	5,289	4,786	5,289	4,899	46,150	46,200	5,949	5,146	5,949	5,259
43,200	43,250	5,300		5,300		46,200	46,250	5,960		5,960
			4,792		4,905				5,152		5,265
43,250	43,300	5,311	4,798	5,311	4,911	46,250	46,300	5,971	5,158	5,971	5,271
43,300	43,350	5,322	4,804	5,322	4,917	46,300	46,350	5,982	5,164	5,982	5,277
43,350	43,400	5,333	4,810	5,333	4,923	46,350	46,400	5,993	5,170	5,993	5,283
43,400	43,450	5,344		5,344		46,400	46,450	6,004		6,004
			4,816		4,929				5,176		5,289
43,450	43,500	5,355	4,822	5,355	4,935	46,450	46,500	6,015	5,182	6,015	5,295
43,500	43,550	5,366	4,828	5,366	4,941	46,500	46,550	6,026	5,188	6,026	5,301
43,550	43,600	5,377	4,834	5,377	4,947	46,550	46,600	6,037	5,194	6,037	5,307
43,600	43,650	5,388	4,840	5,388	4,953	46,600	46,650	6,048	5,200	6,048	5,313
43,650	43,700	5,399		5,399		46,650	46,700	6,059		6,059
			4,846		4,959				5,206		5,319
43,700	43,750	5,410	4,852	5,410	4,965	46,700	46,750	6,070	5,212	6,070	5,325
43,750	43,800	5,421	4,858	5,421	4,971	46,750	46,800	6,081	5,218	6,081	5,331
43,800	43,850	5,432	4,864	5,432	4,977	46,800	46,850	6,092	5,224	6,092	5,337
43,850	43,900	5,443		5,443		46,850	46,900	6,103		6,103
			4,870		4,983				5,230		5,343
43,900	43,950	5,454	4,876	5,454	4,989	46,900	46,950	6,114	5,236	6,114	5,349
43,950	44,000	5,465	4,882	5,465	4,995	46,950	47,000	6,125	5,242	6,125	5,355
44,000						47,000
44,000	44,050	5,476	4,888	5,476	5,001	47,000	47,050	6,136	5,248	6,136	5,361
44,050	44,100	5,487	4,894	5,487	5,007	47,050	47,100	6,147	5,254	6,147	5,367
44,100	44,150	5,498		5,498		47,100	47,150	6,158		6,158
			4,900		5,013				5,260		5,373
44,150	44,200	5,509	4,906	5,509	5,019	47,150	47,200	6,169	5,266	6,169	5,379
44,200	44,250	5,520	4,912	5,520	5,025	47,200	47,250	6,180	5,272	6,180	5,385
44,250	44,300	5,531		5,531		47,250	47,300	6,191		6,191
			4,918		5,031				5,278		5,391
44,300	44,350	5,542		5,542		47,300	47,350	6,202		6,202
			4,924		5,037				5,284		5,397
44,350	44,400	5,553	4,930	5,553	5,043	47,350	47,400	6,213	5,290	6,213	5,403
44,400	44,450	5,564		5,564		47,400	47,450	6,224		6,224
			4,936		5,049				5,296		5,409
44,450	44,500	5,575		5,575		47,450	47,500	6,235		6,235
			4,942		5,055				5,302		5,415
44,500	44,550	5,586		5,586		47,500	47,550	6,246		6,246
			4,948		5,061				5,308		5,421
44,550	44,600	5,597		5,597		47,550	47,600	6,257		6,257
			4,954		5,067				5,314		5,427
44,600	44,650	5,608	4,960	5,608		47,600	47,650	6,268	5,320	6,268
					5,073						5,433
44,650	44,700	5,619		5,619		47,650	47,700	6,279		6,279
			4,966		5,079				5,326		5,439
44,700	44,750	5,630		5,630		47,700	47,750	6,290		6,290
			4,972		5,085				5,332		5,445
44,750	44,800	5,641		5,641		47,750	47,800	6,301		6,301
			4,978		5,091				5,338		5,451
44,800	44,850	5,652		5,652		47,800	47,850	6,312		6,312
			4,984		5,097				5,344		5,457
44,850	44,900	5,663		5,663		47,850	47,900	6,323		6,323
			4,990		5,103				5,350		5,463
44,900	44,950	5,674		5,674		47,900	47,950	6,334		6,334
			4,996		5,109				5,356		5,469
44,950	45,000	5,685		5,685		47,950	48,000	6,345		6,345
			5,002		5,115				5,362		5,475

(Continued)

* This column must also be used by a qualifying widow(er).

-114-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
48,000
48,000	48,050	6,356	5,368	6,356	5,481
48,050	48,100	6,367	5,374	6,367	5,487
48,100	48,150	6,378	5,380	6,378	5,493
48,150	48,200	6,389	5,386	6,389	5,499
48,200	48,250	6,400	5,392	6,400	5,505
48,250	48,300	6,411	5,398	6,411	5,511
48,300	48,350	6,422	5,404	6,422	5,517
48,350	48,400	6,433	5,410	6,433	5,523
48,400	48,450	6,444	5,416	6,444	5,529
48,450	48,500	6,455	5,422	6,455	5,535
48,500	48,550	6,466	5,428	6,466	5,541
48,550	48,600	6,477	5,434	6,477	5,547
48,600	48,650	6,488	5,440	6,488	5,553
48,650	48,700	6,499	5,446	6,499	5,559
48,700	48,750	6,510	5,452	6,510	5,565
48,750	48,800	6,521	5,458	6,521	5,571
48,800	48,850	6,532	5,464	6,532	5,577
48,850	48,900	6,543	5,470	6,543	5,583
48,900	48,950	6,554	5,476	6,554	5,589
48,950	49,000	6,565		6,565
			5,482		5,595
49,000
49,000	49,050	6,576	5,488	6,576	5,601
49,050	49,100	6,587	5,494	6,587	5,607
49,100	49,150	6,598	5,500	6,598	5,613
49,150	49,200	6,609	5,506	6,609	5,619
49,200	49,250	6,620		6,620
			5,512		5,625
49,250	49,300	6,631	5,518	6,631	5,631
49,300	49,350	6,642	5,524	6,642	5,637
49,350	49,400	6,653	5,530	6,653	5,643
49,400	49,450	6,664		6,664
			5,536		5,649
49,450	49,500	6,675	5,542	6,675	5,655
49,500	49,550	6,686	5,548	6,686	5,661
49,550	49,600	6,697	5,554	6,697	5,667
49,600	49,650	6,708	5,560	6,708	5,673
49,650	49,700	6,719		6,719
			5,566		5,679
49,700	49,750	6,730	5,572	6,730	5,685
49,750	49,800	6,741	5,578	6,741	5,691
49,800	49,850	6,752	5,584	6,752	5,697
49,850	49,900	6,763		6,763
			5,590		5,703
49,900	49,950	6,774	5,596	6,774	5,709
49,950	50,000	6,785	5,602	6,785	5,715
50,000
50,000	50,050	6,796	5,608	6,796	5,721
50,050	50,100	6,807	5,614	6,807	5,727
50,100	50,150	6,818		6,818
			5,620		5,733
50,150	50,200	6,829	5,626	6,829	5,739
50,200	50,250	6,840	5,632	6,840	5,745
50,250	50,300	6,851		6,851
			5,638		5,751
50,300	50,350	6,862		6,862
			5,644		5,757
50,350	50,400	6,873	5,650	6,873	5,763
50,400	50,450	6,884		6,884
			5,656		5,769
50,450	50,500	6,895		6,895
			5,662		5,775
50,500	50,550	6,906		6,906
			5,668		5,781
50,550	50,600	6,917		6,917
			5,674		5,787
50,600	50,650	6,928	5,680	6,928
					5,793
50,650	50,700	6,939		6,939
			5,686		5,799
50,700	50,750	6,950		6,950
			5,692		5,805
50,750	50,800	6,961		6,961
			5,698		5,811
50,800	50,850	6,972		6,972
			5,704		5,817
50,850	50,900	6,983		6,983
			5,710		5,823
50,900	50,950	6,994		6,994
			5,716		5,829
50,950	51,000	7,005		7,005
			5,722		5,835

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
51,000						54,000
51,000	51,050	7,016	5,728	7,016	5,841	54,000	54,050	7,676	6,088	7,676	6,234
51,050	51,100	7,027	5,734	7,027	5,847	54,050	54,100	7,687	6,094	7,687	6,245
51,100	51,150	7,038	5,740	7,038	5,853	54,100	54,150	7,698	6,100	7,698	6,256
51,150	51,200	7,049	5,746	7,049	5,859	54,150	54,200	7,709	6,106	7,709	6,267
51,200	51,250	7,060	5,752	7,060	5,865	54,200	54,250	7,720	6,112	7,720	6,278
51,250	51,300	7,071	5,758	7,071	5,871	54,250	54,300	7,731	6,118	7,731	6,289
51,300	51,350	7,082	5,764	7,082	5,877	54,300	54,350	7,742	6,124	7,742	6,300
51,350	51,400	7,093	5,770	7,093	5,883	54,350	54,400	7,753	6,130	7,753	6,311
51,400	51,450	7,104	5,776	7,104	5,889	54,400	54,450	7,764	6,136	7,764	6,322
51,450	51,500	7,115	5,782	7,115	5,895	54,450	54,500	7,775	6,142	7,775	6,333
51,500	51,550	7,126	5,788	7,126	5,901	54,500	54,550	7,786	6,148	7,786	6,344
51,550	51,600	7,137	5,794	7,137	5,907	54,550	54,600	7,797	6,154	7,797	6,355
51,600	51,650	7,148	5,800	7,148	5,913	54,600	54,650	7,808	6,160	7,808	6,366
51,650	51,700	7,159	5,806	7,159	5,919	54,650	54,700	7,819	6,166	7,819	6,377
51,700	51,750	7,170	5,812	7,170	5,925	54,700	54,750	7,830	6,172	7,830	6,388
51,750	51,800	7,181	5,818	7,181	5,931	54,750	54,800	7,841	6,178	7,841	6,399
51,800	51,850	7,192	5,824	7,192	5,937	54,800	54,850	7,852	6,184	7,852	6,410
51,850	51,900	7,203	5,830	7,203	5,943	54,850	54,900	7,863	6,190	7,863	6,421
51,900	51,950	7,214	5,836	7,214	5,949	54,900	54,950	7,874	6,196	7,874	6,432
51,950	52,000	7,225		7,225		54,950	55,000	7,885		7,885
			5,842		5,955				6,202		6,443
52,000						55,000
52,000	52,050	7,236	5,848	7,236	5,961	55,000	55,050	7,896	6,208	7,896	6,454
52,050	52,100	7,247	5,854	7,247	5,967	55,050	55,100	7,907	6,214	7,907	6,465
52,100	52,150	7,258	5,860	7,258	5,973	55,100	55,150	7,918	6,220	7,918	6,476
52,150	52,200	7,269	5,866	7,269	5,979	55,150	55,200	7,929	6,226	7,929	6,487
52,200	52,250	7,280		7,280		55,200	55,250	7,940		7,940
			5,872		5,985				6,232		6,498
52,250	52,300	7,291	5,878	7,291	5,991	55,250	55,300	7,951	6,238	7,951	6,509
52,300	52,350	7,302	5,884	7,302	5,997	55,300	55,350	7,962	6,244	7,962	6,520
52,350	52,400	7,313	5,890	7,313	6,003	55,350	55,400	7,973	6,250	7,973	6,531
52,400	52,450	7,324		7,324		55,400	55,450	7,984		7,984
			5,896		6,009				6,256		6,542
52,450	52,500	7,335	5,902	7,335	6,015	55,450	55,500	7,995	6,262	7,995	6,553
52,500	52,550	7,346	5,908	7,346	6,021	55,500	55,550	8,006	6,268	8,006	6,564
52,550	52,600	7,357	5,914	7,357	6,027	55,550	55,600	8,017	6,274	8,017	6,575
52,600	52,650	7,368	5,920	7,368	6,033	55,600	55,650	8,028	6,280	8,028	6,586
52,650	52,700	7,379		7,379		55,650	55,700	8,039		8,039
			5,926		6,039				6,286		6,597
52,700	52,750	7,390	5,932	7,390	6,045	55,700	55,750	8,050	6,292	8,050	6,608
52,750	52,800	7,401	5,938	7,401	6,051	55,750	55,800	8,061	6,298	8,061	6,619
52,800	52,850	7,412	5,944	7,412	6,057	55,800	55,850	8,072	6,304	8,072	6,630
52,850	52,900	7,423		7,423		55,850	55,900	8,083		8,083
			5,950		6,063				6,310		6,641
52,900	52,950	7,434	5,956	7,434	6,069	55,900	55,950	8,094	6,316	8,094	6,652
52,950	53,000	7,445	5,962	7,445	6,075	55,950	56,000	8,105	6,322	8,105	6,663
53,000						56,000
53,000	53,050	7,456	5,968	7,456	6,081	56,000	56,050	8,116	6,328	8,116	6,674
53,050	53,100	7,467	5,974	7,467	6,087	56,050	56,100	8,127	6,334	8,127	6,685
53,100	53,150	7,478		7,478		56,100	56,150	8,138		8,138
			5,980		6,093				6,340		6,696
53,150	53,200	7,489	5,986	7,489	6,099	56,150	56,200	8,149	6,346	8,149	6,707
53,200	53,250	7,500	5,992	7,500	6,105	56,200	56,250	8,160	6,352	8,160	6,718
53,250	53,300	7,511		7,511		56,250	56,300	8,171		8,171
			5,998		6,111				6,358		6,729
53,300	53,350	7,522		7,522		56,300	56,350	8,182		8,182
			6,004		6,117				6,364		6,740
53,350	53,400	7,533	6,010	7,533	6,123	56,350	56,400	8,193	6,370	8,193	6,751
53,400	53,450	7,544		7,544		56,400	56,450	8,204		8,204
			6,016		6,129				6,376		6,762
53,450	53,500	7,555		7,555		56,450	56,500	8,215		8,215
			6,022		6,135				6,382		6,773
53,500	53,550	7,566		7,566		56,500	56,550	8,226		8,226
			6,028		6,141				6,388		6,784
53,550	53,600	7,577		7,577		56,550	56,600	8,237		8,237
			6,034		6,147				6,394		6,795
53,600	53,650	7,588	6,040	7,588		56,600	56,650	8,248	6,400	8,248
					6,153						6,806
53,650	53,700	7,599		7,599		56,650	56,700	8,259		8,259
			6,046		6,159				6,406		6,817
53,700	53,750	7,610		7,610		56,700	56,750	8,270		8,270
			6,052		6,168				6,412		6,828
53,750	53,800	7,621		7,621		56,750	56,800	8,281		8,281
			6,058		6,179				6,418		6,839
53,800	53,850	7,632		7,632		56,800	56,850	8,292		8,292
			6,064		6,190				6,424		6,850
53,850	53,900	7,643		7,643		56,850	56,900	8,303		8,303
			6,070		6,201				6,430		6,861
53,900	53,950	7,654		7,654		56,900	56,950	8,314		8,314
			6,076		6,212				6,436		6,872
53,950	54,000	7,665		7,665		56,950	57,000	8,325		8,325
			6,082		6,223				6,442		6,883

(Continued)

* This column must also be used by a qualifying widow(er).

-115-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
57,000
57,000	57,050	8,336	6,448	8,336	6,894
57,050	57,100	8,347	6,454	8,347	6,905
57,100	57,150	8,358	6,460	8,358	6,916
57,150	57,200	8,369	6,466	8,369	6,927
57,200	57,250	8,380	6,472	8,380	6,938
57,250	57,300	8,391	6,478	8,391	6,949
57,300	57,350	8,402	6,484	8,402	6,960
57,350	57,400	8,413	6,490	8,413	6,971
57,400	57,450	8,424	6,496	8,424	6,982
57,450	57,500	8,435	6,502	8,435	6,993
57,500	57,550	8,446	6,508	8,446	7,004
57,550	57,600	8,457	6,514	8,457	7,015
57,600	57,650	8,468	6,520	8,468	7,026
57,650	57,700	8,479	6,526	8,479	7,037
57,700	57,750	8,490	6,532	8,490	7,048
57,750	57,800	8,501	6,538	8,501	7,059
57,800	57,850	8,512	6,544	8,512	7,070
57,850	57,900	8,523	6,550	8,523	7,081
57,900	57,950	8,534	6,556	8,534	7,092
57,950	58,000	8,545		8,545
			6,562		7,103
58,000
58,000	58,050	8,556	6,568	8,556	7,114
58,050	58,100	8,567	6,574	8,567	7,125
58,100	58,150	8,578	6,580	8,578	7,136
58,150	58,200	8,589	6,586	8,589	7,147
58,200	58,250	8,600		8,600
			6,592		7,158
58,250	58,300	8,611	6,598	8,611	7,169
58,300	58,350	8,622	6,604	8,622	7,180
58,350	58,400	8,633	6,610	8,633	7,191
58,400	58,450	8,644		8,644
			6,616		7,202
58,450	58,500	8,655	6,622	8,655	7,213
58,500	58,550	8,666	6,628	8,666	7,224
58,550	58,600	8,677	6,634	8,677	7,235
58,600	58,650	8,688	6,640	8,688	7,246
58,650	58,700	8,699		8,699
			6,646		7,257
58,700	58,750	8,710	6,652	8,710	7,268
58,750	58,800	8,721	6,658	8,721	7,279
58,800	58,850	8,732	6,664	8,732	7,290
58,850	58,900	8,743		8,743
			6,670		7,301
58,900	58,950	8,754	6,676	8,754	7,312
58,950	59,000	8,765	6,682	8,765	7,323
59,000
59,000	59,050	8,776	6,688	8,776	7,334
59,050	59,100	8,787	6,694	8,787	7,345
59,100	59,150	8,798		8,798
			6,700		7,356
59,150	59,200	8,809	6,706	8,809	7,367
59,200	59,250	8,820	6,712	8,820	7,378
59,250	59,300	8,831		8,831
			6,718		7,389
59,300	59,350	8,842		8,842
			6,724		7,400
59,350	59,400	8,853	6,730	8,853	7,411
59,400	59,450	8,864		8,864
			6,736		7,422
59,450	59,500	8,875		8,875
			6,742		7,433
59,500	59,550	8,886		8,886
			6,748		7,444
59,550	59,600	8,897		8,897
			6,754		7,455
59,600	59,650	8,908	6,760	8,908
					7,466
59,650	59,700	8,919		8,919
			6,766		7,477
59,700	59,750	8,930		8,930
			6,772		7,488
59,750	59,800	8,941		8,941
			6,778		7,499
59,800	59,850	8,952		8,952
			6,784		7,510
59,850	59,900	8,963		8,963
			6,790		7,521
59,900	59,950	8,974		8,974
			6,796		7,532
59,950	60,000	8,985		8,985
			6,802		7,543

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
60,000						63,000
60,000	60,050	8,996	6,808	8,996	7,554	63,000	63,050	9,656	7,168	9,656	8,214
60,050	60,100	9,007	6,814	9,007	7,565	63,050	63,100	9,667	7,174	9,667	8,225
60,100	60,150	9,018	6,820	9,018	7,576	63,100	63,150	9,678	7,180	9,678	8,236
60,150	60,200	9,029	6,826	9,029	7,587	63,150	63,200	9,689	7,186	9,689	8,247
60,200	60,250	9,040	6,832	9,040	7,598	63,200	63,250	9,700	7,192	9,700	8,258
60,250	60,300	9,051	6,838	9,051	7,609	63,250	63,300	9,711	7,198	9,711	8,269
60,300	60,350	9,062	6,844	9,062	7,620	63,300	63,350	9,722	7,204	9,722	8,280
60,350	60,400	9,073	6,850	9,073	7,631	63,350	63,400	9,733	7,210	9,733	8,291
60,400	60,450	9,084	6,856	9,084	7,642	63,400	63,450	9,744	7,216	9,744	8,302
60,450	60,500	9,095	6,862	9,095	7,653	63,450	63,500	9,755	7,222	9,755	8,313
60,500	60,550	9,106	6,868	9,106	7,664	63,500	63,550	9,766	7,228	9,766	8,324
60,550	60,600	9,117	6,874	9,117	7,675	63,550	63,600	9,777	7,234	9,777	8,335
60,600	60,650	9,128	6,880	9,128	7,686	63,600	63,650	9,788	7,240	9,788	8,346
60,650	60,700	9,139	6,886	9,139	7,697	63,650	63,700	9,799	7,246	9,799	8,357
60,700	60,750	9,150	6,892	9,150	7,708	63,700	63,750	9,810	7,252	9,810	8,368
60,750	60,800	9,161	6,898	9,161	7,719	63,750	63,800	9,821	7,258	9,821	8,379
60,800	60,850	9,172	6,904	9,172	7,730	63,800	63,850	9,832	7,264	9,832	8,390
60,850	60,900	9,183	6,910	9,183	7,741	63,850	63,900	9,843	7,270	9,843	8,401
60,900	60,950	9,194	6,916	9,194	7,752	63,900	63,950	9,854	7,276	9,854	8,412
60,950	61,000	9,205		9,205		63,950	64,000	9,865		9,865
			6,922		7,763				7,282		8,423
61,000						64,000
61,000	61,050	9,216	6,928	9,216	7,774	64,000	64,050	9,876	7,288	9,876	8,434
61,050	61,100	9,227	6,934	9,227	7,785	64,050	64,100	9,887	7,294	9,887	8,445
61,100	61,150	9,238	6,940	9,238	7,796	64,100	64,150	9,898	7,300	9,898	8,456
61,150	61,200	9,249	6,946	9,249	7,807	64,150	64,200	9,909	7,306	9,909	8,467
61,200	61,250	9,260		9,260		64,200	64,250	9,920		9,920
			6,952		7,818				7,312		8,478
61,250	61,300	9,271	6,958	9,271	7,829	64,250	64,300	9,931	7,318	9,931	8,489
61,300	61,350	9,282	6,964	9,282	7,840	64,300	64,350	9,942	7,324	9,942	8,500
61,350	61,400	9,293	6,970	9,293	7,851	64,350	64,400	9,953	7,330	9,953	8,511
61,400	61,450	9,304		9,304		64,400	64,450	9,964		9,964
			6,976		7,862				7,336		8,522
61,450	61,500	9,315	6,982	9,315	7,873	64,450	64,500	9,975	7,342	9,975	8,533
61,500	61,550	9,326	6,988	9,326	7,884	64,500	64,550	9,986	7,348	9,986	8,544
61,550	61,600	9,337	6,994	9,337	7,895	64,550	64,600	9,997	7,354	9,997	8,555
61,600	61,650	9,348	7,000	9,348	7,906	64,600	64,650	10,008	7,360	10,008	8,566
61,650	61,700	9,359		9,359		64,650	64,700	10,019		10,019
			7,006		7,917				7,366		8,577
61,700	61,750	9,370	7,012	9,370	7,928	64,700	64,750	10,030	7,372	10,030	8,588
61,750	61,800	9,381	7,018	9,381	7,939	64,750	64,800	10,041	7,378	10,041	8,599
61,800	61,850	9,392	7,024	9,392	7,950	64,800	64,850	10,052	7,384	10,052	8,610
61,850	61,900	9,403		9,403		64,850	64,900	10,063		10,063
			7,030		7,961				7,390		8,621
61,900	61,950	9,414	7,036	9,414	7,972	64,900	64,950	10,074	7,396	10,074	8,632
61,950	62,000	9,425	7,042	9,425	7,983	64,950	65,000	10,085	7,402	10,085	8,643
62,000						65,000
62,000	62,050	9,436	7,048	9,436	7,994	65,000	65,050	10,096	7,408	10,096	8,654
62,050	62,100	9,447	7,054	9,447	8,005	65,050	65,100	10,107	7,414	10,107	8,665
62,100	62,150	9,458		9,458		65,100	65,150	10,118		10,118
			7,060		8,016				7,420		8,676
62,150	62,200	9,469	7,066	9,469	8,027	65,150	65,200	10,129	7,426	10,129	8,687
62,200	62,250	9,480	7,072	9,480	8,038	65,200	65,250	10,140	7,432	10,140	8,698
62,250	62,300	9,491		9,491		65,250	65,300	10,151		10,151
			7,078		8,049				7,438		8,709
62,300	62,350	9,502		9,502		65,300	65,350	10,162		10,162
			7,084		8,060				7,444		8,720
62,350	62,400	9,513	7,090	9,513	8,071	65,350	65,400	10,173	7,450	10,173	8,731
62,400	62,450	9,524		9,524		65,400	65,450	10,184		10,184
			7,096		8,082				7,456		8,742
62,450	62,500	9,535		9,535		65,450	65,500	10,195		10,195
			7,102		8,093				7,462		8,753
62,500	62,550	9,546		9,546		65,500	65,550	10,206		10,206
			7,108		8,104				7,468		8,764
62,550	62,600	9,557		9,557		65,550	65,600	10,217		10,217
			7,114		8,115				7,474		8,775
62,600	62,650	9,568	7,120	9,568		65,600	65,650	10,228	7,480	10,228
					8,126						8,786
62,650	62,700	9,579		9,579		65,650	65,700	10,239		10,239
			7,126		8,137				7,486		8,797
62,700	62,750	9,590		9,590		65,700	65,750	10,250		10,250
			7,132		8,148				7,492		8,808
62,750	62,800	9,601		9,601		65,750	65,800	10,261		10,261
			7,138		8,159				7,498		8,819
62,800	62,850	9,612		9,612		65,800	65,850	10,272		10,272
			7,144		8,170				7,504		8,830
62,850	62,900	9,623		9,623		65,850	65,900	10,283		10,283
			7,150		8,181				7,510		8,841
62,900	62,950	9,634		9,634		65,900	65,950	10,294		10,294
			7,156		8,192				7,516		8,852
62,950	63,000	9,645		9,645		65,950	66,000	10,305		10,305
			7,162		8,203				7,522		8,863

(Continued)

* This column must also be used by a qualifying widow(er).

-116-

If line 10			And you are—
(taxable
income) is—
At	But	Single	Married	Married	Head of
least	less		filing	filing	a
	than		jointly *	sepa-	house-
				rately	hold
			Your tax is—
66,000
66,000	66,050	10,316	7,528	10,316	8,874
66,050	66,100	10,327	7,534	10,327	8,885
66,100	66,150	10,338	7,540	10,338	8,896
66,150	66,200	10,349	7,546	10,349	8,907
66,200	66,250	10,360	7,552	10,360	8,918
66,250	66,300	10,371	7,558	10,371	8,929
66,300	66,350	10,382	7,564	10,382	8,940
66,350	66,400	10,393	7,570	10,393	8,951
66,400	66,450	10,404	7,576	10,404	8,962
66,450	66,500	10,415	7,582	10,415	8,973
66,500	66,550	10,426	7,588	10,426	8,984
66,550	66,600	10,437	7,594	10,437	8,995
66,600	66,650	10,448	7,600	10,448	9,006
66,650	66,700	10,459	7,606	10,459	9,017
66,700	66,750	10,470	7,612	10,470	9,028
66,750	66,800	10,481	7,618	10,481	9,039
66,800	66,850	10,492	7,624	10,492	9,050
66,850	66,900	10,503	7,630	10,503	9,061
66,900	66,950	10,514	7,636	10,514	9,072
66,950	67,000	10,525		10,525
			7,642		9,083
67,000
67,000	67,050	10,536	7,648	10,536	9,094
67,050	67,100	10,547	7,654	10,547	9,105
67,100	67,150	10,558	7,660	10,558	9,116
67,150	67,200	10,569	7,666	10,569	9,127
67,200	67,250	10,580		10,580
			7,672		9,138
67,250	67,300	10,591	7,678	10,591	9,149
67,300	67,350	10,602	7,684	10,602	9,160
67,350	67,400	10,613	7,690	10,613	9,171
67,400	67,450	10,624		10,624
			7,696		9,182
67,450	67,500	10,635	7,702	10,635	9,193
67,500	67,550	10,646	7,708	10,646	9,204
67,550	67,600	10,657	7,714	10,657	9,215
67,600	67,650	10,668	7,720	10,668	9,226
67,650	67,700	10,679		10,679
			7,726		9,237
67,700	67,750	10,690	7,732	10,690	9,248
67,750	67,800	10,701	7,738	10,701	9,259
67,800	67,850	10,712	7,744	10,712	9,270
67,850	67,900	10,723		10,723
			7,750		9,281
67,900	67,950	10,734	7,756	10,734	9,292
67,950	68,000	10,745	7,762	10,745	9,303
68,000
68,000	68,050	10,756	7,768	10,756	9,314
68,050	68,100	10,767	7,774	10,767	9,325
68,100	68,150	10,778		10,778
			7,780		9,336
68,150	68,200	10,789	7,786	10,789	9,347
68,200	68,250	10,800	7,792	10,800	9,358
68,250	68,300	10,811		10,811
			7,798		9,369
68,300	68,350	10,822		10,822
			7,804		9,380
68,350	68,400	10,833	7,810	10,833	9,391
68,400	68,450	10,844		10,844
			7,816		9,402
68,450	68,500	10,855		10,855
			7,822		9,413
68,500	68,550	10,866		10,866
			7,828		9,424
68,550	68,600	10,877		10,877
			7,834		9,435
68,600	68,650	10,888	7,840	10,888
					9,446
68,650	68,700	10,899		10,899
			7,846		9,457
68,700	68,750	10,910		10,910
			7,852		9,468
68,750	68,800	10,921		10,921
			7,858		9,479
68,800	68,850	10,932		10,932
			7,864		9,490
68,850	68,900	10,943		10,943
			7,870		9,501
68,900	68,950	10,954		10,954
			7,876		9,512
68,950	69,000	10,965		10,965
			7,882		9,523

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—
(taxable						(taxable
income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold
			Your tax is—						Your tax is—
69,000						72,000
69,000	69,050	10,976	7,888	10,976	9,534	72,000	72,050	11,636	8,248	11,636	10,194
69,050	69,100	10,987	7,894	10,987	9,545	72,050	72,100	11,647	8,254	11,647	10,205
69,100	69,150	10,998	7,900	10,998	9,556	72,100	72,150	11,658	8,260	11,658	10,216
69,150	69,200	11,009	7,906	11,009	9,567	72,150	72,200	11,669	8,266	11,669	10,227
69,200	69,250	11,020	7,912	11,020	9,578	72,200	72,250	11,680	8,272	11,680	10,238
69,250	69,300	11,031	7,918	11,031	9,589	72,250	72,300	11,691	8,278	11,691	10,249
69,300	69,350	11,042	7,924	11,042	9,600	72,300	72,350	11,702	8,284	11,702	10,260
69,350	69,400	11,053	7,930	11,053	9,611	72,350	72,400	11,713	8,290	11,713	10,271
69,400	69,450	11,064	7,936	11,064	9,622	72,400	72,450	11,724	8,296	11,724	10,282
69,450	69,500	11,075	7,942	11,075	9,633	72,450	72,500	11,735	8,302	11,735	10,293
69,500	69,550	11,086	7,948	11,086	9,644	72,500	72,550	11,746	8,308	11,746	10,304
69,550	69,600	11,097	7,954	11,097	9,655	72,550	72,600	11,757	8,314	11,757	10,315
69,600	69,650	11,108	7,960	11,108	9,666	72,600	72,650	11,768	8,320	11,768	10,326
69,650	69,700	11,119	7,966	11,119	9,677	72,650	72,700	11,779	8,326	11,779	10,337
69,700	69,750	11,130	7,972	11,130	9,688	72,700	72,750	11,790	8,332	11,790	10,348
69,750	69,800	11,141	7,978	11,141	9,699	72,750	72,800	11,801	8,338	11,801	10,359
69,800	69,850	11,152	7,984	11,152	9,710	72,800	72,850	11,812	8,344	11,812	10,370
69,850	69,900	11,163	7,990	11,163	9,721	72,850	72,900	11,823	8,350	11,823	10,381
69,900	69,950	11,174	7,996	11,174	9,732	72,900	72,950	11,834	8,356	11,834	10,392
69,950	70,000	11,185		11,185		72,950	73,000	11,845		11,845
			8,002		9,743				8,362		10,403
70,000						73,000
70,000	70,050	11,196	8,008	11,196	9,754	73,000	73,050	11,856	8,368	11,856	10,414
70,050	70,100	11,207	8,014	11,207	9,765	73,050	73,100	11,867	8,374	11,867	10,425
70,100	70,150	11,218	8,020	11,218	9,776	73,100	73,150	11,878	8,380	11,878	10,436
70,150	70,200	11,229	8,026	11,229	9,787	73,150	73,200	11,889	8,386	11,889	10,447
70,200	70,250	11,240		11,240		73,200	73,250	11,900		11,900
			8,032		9,798				8,392		10,458
70,250	70,300	11,251	8,038	11,251	9,809	73,250	73,300	11,911	8,398	11,911	10,469
70,300	70,350	11,262	8,044	11,262	9,820	73,300	73,350	11,922	8,404	11,922	10,480
70,350	70,400	11,273	8,050	11,273	9,831	73,350	73,400	11,933	8,410	11,933	10,491
70,400	70,450	11,284		11,284		73,400	73,450	11,944		11,944
			8,056		9,842				8,416		10,502
70,450	70,500	11,295	8,062	11,295	9,853	73,450	73,500	11,955	8,422	11,955	10,513
70,500	70,550	11,306	8,068	11,306	9,864	73,500	73,550	11,966	8,428	11,966	10,524
70,550	70,600	11,317	8,074	11,317	9,875	73,550	73,600	11,977	8,434	11,977	10,535
70,600	70,650	11,328	8,080	11,328	9,886	73,600	73,650	11,988	8,440	11,988	10,546
70,650	70,700	11,339		11,339		73,650	73,700	11,999		11,999
			8,086		9,897				8,446		10,557
70,700	70,750	11,350	8,092	11,350	9,908	73,700	73,750	12,010	8,452	12,010	10,568
70,750	70,800	11,361	8,098	11,361	9,919	73,750	73,800	12,021	8,458	12,021	10,579
70,800	70,850	11,372	8,104	11,372	9,930	73,800	73,850	12,032	8,464	12,032	10,590
70,850	70,900	11,383		11,383		73,850	73,900	12,043		12,043
			8,110		9,941				8,470		10,601
70,900	70,950	11,394	8,116	11,394	9,952	73,900	73,950	12,054	8,476	12,054	10,612
70,950	71,000	11,405	8,122	11,405	9,963	73,950	74,000	12,065	8,482	12,065	10,623
71,000						74,000
71,000	71,050	11,416	8,128	11,416	9,974	74,000	74,050	12,076	8,488	12,076	10,634
71,050	71,100	11,427	8,134	11,427	9,985	74,050	74,100	12,087	8,494	12,087	10,645
71,100	71,150	11,438		11,438		74,100	74,150	12,098		12,098
			8,140		9,996				8,500		10,656
71,150	71,200	11,449	8,146	11,449	10,007	74,150	74,200	12,109	8,506	12,109	10,667
71,200	71,250	11,460	8,152	11,460	10,018	74,200	74,250	12,120	8,512	12,120	10,678
71,250	71,300	11,471		11,471		74,250	74,300	12,131		12,131
			8,158		10,029				8,518		10,689
71,300	71,350	11,482		11,482		74,300	74,350	12,142		12,142
			8,164		10,040				8,524		10,700
71,350	71,400	11,493	8,170	11,493	10,051	74,350	74,400	12,153	8,530	12,153	10,711
71,400	71,450	11,504		11,504		74,400	74,450	12,164		12,164
			8,176		10,062				8,536		10,722
71,450	71,500	11,515		11,515		74,450	74,500	12,175		12,175
			8,182		10,073				8,542		10,733
71,500	71,550	11,526		11,526		74,500	74,550	12,186		12,186
			8,188		10,084				8,548		10,744
71,550	71,600	11,537		11,537		74,550	74,600	12,197		12,197
			8,194		10,095				8,554		10,755
71,600	71,650	11,548	8,200	11,548		74,600	74,650	12,208	8,560	12,208
					10,106						10,766
71,650	71,700	11,559		11,559		74,650	74,700	12,219		12,219
			8,206		10,117				8,566		10,777
71,700	71,750	11,570		11,570		74,700	74,750	12,230		12,230
			8,212		10,128				8,572		10,788
71,750	71,800	11,581		11,581		74,750	74,800	12,241		12,241
			8,218		10,139				8,578		10,799
71,800	71,850	11,592		11,592		74,800	74,850	12,252		12,252
			8,224		10,150				8,584		10,810
71,850	71,900	11,603		11,603		74,850	74,900	12,263		12,263
			8,230		10,161				8,590		10,821
71,900	71,950	11,614		11,614		74,900	74,950	12,274		12,274
			8,236		10,172				8,596		10,832
71,950	72,000	11,625		11,625		74,950	75,000	12,285		12,285
			8,242		10,183				8,602		10,843

(Continued)

* This column must also be used by a qualifying widow(er).

-117-

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—			If line 10			And you are—
(taxable						(taxable						(taxable
income) is—						income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold					rately	hold
			Your tax is—						Your tax is—						Your tax is—
75,000						78,000						81,000
75,000	75,050	12,296	8,608	12,296	10,854	78,000	78,050	12,956	8,968	12,956	11,514	81,000	81,050	13,616	9,406	13,616	12,174
75,050	75,100	12,307	8,614	12,307	10,865	78,050	78,100	12,967	8,974	12,967	11,525	81,050	81,100	13,627	9,417	13,627	12,185
75,100	75,150	12,318	8,620	12,318	10,876	78,100	78,150	12,978	8,980	12,978	11,536	81,100	81,150	13,638	9,428	13,638	12,196
75,150	75,200	12,329	8,626	12,329	10,887	78,150	78,200	12,989	8,986	12,989	11,547	81,150	81,200	13,649	9,439	13,649	12,207
75,200	75,250	12,340	8,632	12,340	10,898	78,200	78,250	13,000	8,992	13,000	11,558	81,200	81,250	13,660	9,450	13,660	12,218
75,250	75,300	12,351	8,638	12,351	10,909	78,250	78,300	13,011	8,998	13,011	11,569	81,250	81,300	13,671	9,461	13,671	12,229
75,300	75,350	12,362	8,644	12,362	10,920	78,300	78,350	13,022	9,004	13,022	11,580	81,300	81,350	13,682	9,472	13,682	12,240
75,350	75,400	12,373	8,650	12,373	10,931	78,350	78,400	13,033	9,010	13,033	11,591	81,350	81,400	13,693	9,483	13,693	12,251
75,400	75,450	12,384	8,656	12,384	10,942	78,400	78,450	13,044	9,016	13,044	11,602	81,400	81,450	13,704	9,494	13,704	12,262
75,450	75,500	12,395	8,662	12,395	10,953	78,450	78,500	13,055	9,022	13,055	11,613	81,450	81,500	13,715	9,505	13,715	12,273
75,500	75,550	12,406	8,668	12,406	10,964	78,500	78,550	13,066	9,028	13,066	11,624	81,500	81,550	13,726	9,516	13,726	12,284
75,550	75,600	12,417	8,674	12,417	10,975	78,550	78,600	13,077	9,034	13,077	11,635	81,550	81,600	13,737	9,527	13,737	12,295
75,600	75,650	12,428	8,680	12,428	10,986	78,600	78,650	13,088	9,040	13,088	11,646	81,600	81,650	13,748	9,538	13,748	12,306
75,650	75,700	12,439	8,686	12,439	10,997	78,650	78,700	13,099	9,046	13,099	11,657	81,650	81,700	13,759	9,549	13,759	12,317
75,700	75,750	12,450	8,692	12,450	11,008	78,700	78,750	13,110	9,052	13,110	11,668	81,700	81,750	13,770	9,560	13,770	12,328
75,750	75,800	12,461	8,698	12,461	11,019	78,750	78,800	13,121	9,058	13,121	11,679	81,750	81,800	13,781	9,571	13,781	12,339
75,800	75,850	12,472	8,704	12,472	11,030	78,800	78,850	13,132	9,064	13,132	11,690	81,800	81,850	13,792	9,582	13,792	12,350
75,850	75,900	12,483	8,710	12,483	11,041	78,850	78,900	13,143	9,070	13,143	11,701	81,850	81,900	13,803	9,593	13,803	12,361
75,900	75,950	12,494	8,716	12,494	11,052	78,900	78,950	13,154	9,076	13,154	11,712	81,900	81,950	13,814	9,604	13,814	12,372
75,950	76,000	12,505		12,505		78,950	79,000	13,165		13,165		81,950	82,000	13,825		13,825
			8,722		11,063				9,082		11,723				9,615		12,383
76,000						79,000						82,000
76,000	76,050	12,516	8,728	12,516	11,074	79,000	79,050	13,176	9,088	13,176	11,734	82,000	82,050	13,836	9,626	13,836	12,394
76,050	76,100	12,527	8,734	12,527	11,085	79,050	79,100	13,187	9,094	13,187	11,745	82,050	82,100	13,847	9,637	13,847	12,405
76,100	76,150	12,538	8,740	12,538	11,096	79,100	79,150	13,198	9,100	13,198	11,756	82,100	82,150	13,858	9,648	13,858	12,416
76,150	76,200	12,549	8,746	12,549	11,107	79,150	79,200	13,209	9,106	13,209	11,767	82,150	82,200	13,869	9,659	13,869	12,427
76,200	76,250	12,560		12,560		79,200	79,250	13,220		13,220		82,200	82,250	13,880		13,880
			8,752		11,118				9,112		11,778				9,670		12,438
76,250	76,300	12,571	8,758	12,571	11,129	79,250	79,300	13,231	9,118	13,231	11,789	82,250	82,300	13,891	9,681	13,891	12,449
76,300	76,350	12,582	8,764	12,582	11,140	79,300	79,350	13,242	9,124	13,242	11,800	82,300	82,350	13,902	9,692	13,902	12,460
76,350	76,400	12,593	8,770	12,593	11,151	79,350	79,400	13,253	9,130	13,253	11,811	82,350	82,400	13,913	9,703	13,913	12,471
76,400	76,450	12,604		12,604		79,400	79,450	13,264		13,264		82,400	82,450	13,924		13,924
			8,776		11,162				9,136		11,822				9,714		12,482
76,450	76,500	12,615	8,782	12,615	11,173	79,450	79,500	13,275	9,142	13,275	11,833	82,450	82,500	13,935	9,725	13,935	12,493
76,500	76,550	12,626	8,788	12,626	11,184	79,500	79,550	13,286	9,148	13,286	11,844	82,500	82,550	13,946	9,736	13,946	12,504
76,550	76,600	12,637	8,794	12,637	11,195	79,550	79,600	13,297	9,154	13,297	11,855	82,550	82,600	13,957	9,747	13,957	12,515
76,600	76,650	12,648	8,800	12,648	11,206	79,600	79,650	13,308	9,160	13,308	11,866	82,600	82,650	13,968	9,758	13,968	12,526
76,650	76,700	12,659		12,659		79,650	79,700	13,319		13,319		82,650	82,700	13,979		13,979
			8,806		11,217				9,166		11,877				9,769		12,537
76,700	76,750	12,670	8,812	12,670	11,228	79,700	79,750	13,330	9,172	13,330	11,888	82,700	82,750	13,990	9,780	13,990	12,548
76,750	76,800	12,681	8,818	12,681	11,239	79,750	79,800	13,341	9,178	13,341	11,899	82,750	82,800	14,001	9,791	14,001	12,559
76,800	76,850	12,692	8,824	12,692	11,250	79,800	79,850	13,352	9,184	13,352	11,910	82,800	82,850	14,012	9,802	14,012	12,570
76,850	76,900	12,703		12,703		79,850	79,900	13,363		13,363		82,850	82,900	14,023		14,023
			8,830		11,261				9,190		11,921				9,813		12,581
76,900	76,950	12,714	8,836	12,714	11,272	79,900	79,950	13,374	9,196	13,374	11,932	82,900	82,950	14,034	9,824	14,034	12,592
76,950	77,000	12,725	8,842	12,725	11,283	79,950	80,000	13,385	9,202	13,385	11,943	82,950	83,000	14,045	9,835	14,045	12,603
77,000						80,000						83,000
77,000	77,050	12,736	8,848	12,736	11,294	80,000	80,050	13,396	9,208	13,396	11,954	83,000	83,050	14,056	9,846	14,056	12,614
77,050	77,100	12,747	8,854	12,747	11,305	80,050	80,100	13,407	9,214	13,407	11,965	83,050	83,100	14,067	9,857	14,067	12,625
77,100	77,150	12,758		12,758		80,100	80,150	13,418		13,418		83,100	83,150	14,078		14,078
			8,860		11,316				9,220		11,976				9,868		12,636
77,150	77,200	12,769	8,866	12,769	11,327	80,150	80,200	13,429	9,226	13,429	11,987	83,150	83,200	14,089	9,879	14,089	12,647
77,200	77,250	12,780	8,872	12,780	11,338	80,200	80,250	13,440	9,232	13,440	11,998	83,200	83,250	14,100	9,890	14,100	12,658
77,250	77,300	12,791		12,791		80,250	80,300	13,451		13,451		83,250	83,300	14,111		14,111
			8,878		11,349				9,241		12,009				9,901		12,669
77,300	77,350	12,802		12,802		80,300	80,350	13,462		13,462		83,300	83,350	14,122		14,122
			8,884		11,360				9,252		12,020				9,912		12,680
77,350	77,400	12,813	8,890	12,813	11,371	80,350	80,400	13,473	9,263	13,473	12,031	83,350	83,400	14,133	9,923	14,133	12,691
77,400	77,450	12,824		12,824		80,400	80,450	13,484		13,484		83,400	83,450	14,144		14,144
			8,896		11,382				9,274		12,042				9,934		12,702
77,450	77,500	12,835		12,835		80,450	80,500	13,495		13,495		83,450	83,500	14,155		14,155
			8,902		11,393				9,285		12,053				9,945		12,713
77,500	77,550	12,846		12,846		80,500	80,550	13,506		13,506		83,500	83,550	14,166		14,166
			8,908		11,404				9,296		12,064				9,956		12,724
77,550	77,600	12,857		12,857		80,550	80,600	13,517		13,517		83,550	83,600	14,177		14,177
			8,914		11,415				9,307		12,075				9,967		12,735
77,600	77,650	12,868	8,920	12,868		80,600	80,650	13,528	9,318	13,528		83,600	83,650	14,188	9,978	14,188
					11,426						12,086						12,746
77,650	77,700	12,879		12,879		80,650	80,700	13,539		13,539		83,650	83,700	14,199		14,199
			8,926		11,437				9,329		12,097				9,989		12,757
77,700	77,750	12,890		12,890		80,700	80,750	13,550		13,550		83,700	83,750	14,210		14,210
			8,932		11,448				9,340		12,108				10,000		12,768
77,750	77,800	12,901		12,901		80,750	80,800	13,561		13,561		83,750	83,800	14,221		14,221
			8,938		11,459				9,351		12,119				10,011		12,779
77,800	77,850	12,912		12,912		80,800	80,850	13,572		13,572		83,800	83,850	14,232		14,232
			8,944		11,470				9,362		12,130				10,022		12,790
77,850	77,900	12,923		12,923		80,850	80,900	13,583		13,583		83,850	83,900	14,243		14,243
			8,950		11,481				9,373		12,141				10,033		12,801
77,900	77,950	12,934		12,934		80,900	80,950	13,594		13,594		83,900	83,950	14,254		14,254
			8,956		11,492				9,384		12,152				10,044		12,812
77,950	78,000	12,945		12,945		80,950	81,000	13,605		13,605		83,950	84,000	14,265		14,265
			8,962		11,503				9,395		12,163				10,055		12,823

(Continued)

* This column must also be used by a qualifying widow(er).

-118-

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—			If line 10			And you are—
(taxable						(taxable						(taxable
income) is—						income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold					rately	hold
			Your tax is—						Your tax is—						Your tax is—
84,000						87,000						90,000
84,000	84,050	14,276	10,066	14,276	12,834	87,000	87,050	14,966	10,726	14,966	13,524	90,000	90,050	15,686	11,386	15,686	14,244
84,050	84,100	14,287	10,077	14,287	12,845	87,050	87,100	14,978	10,737	14,978	13,536	90,050	90,100	15,698	11,397	15,698	14,256
84,100	84,150	14,298	10,088	14,298	12,856	87,100	87,150	14,990	10,748	14,990	13,548	90,100	90,150	15,710	11,408	15,710	14,268
84,150	84,200	14,309	10,099	14,309	12,867	87,150	87,200	15,002	10,759	15,002	13,560	90,150	90,200	15,722	11,419	15,722	14,280
84,200	84,250	14,320	10,110	14,320	12,878	87,200	87,250	15,014	10,770	15,014	13,572	90,200	90,250	15,734	11,430	15,734	14,292
84,250	84,300	14,331	10,121	14,331	12,889	87,250	87,300	15,026	10,781	15,026	13,584	90,250	90,300	15,746	11,441	15,746	14,304
84,300	84,350	14,342	10,132	14,342	12,900	87,300	87,350	15,038	10,792	15,038	13,596	90,300	90,350	15,758	11,452	15,758	14,316
84,350	84,400	14,353	10,143	14,353	12,911	87,350	87,400	15,050	10,803	15,050	13,608	90,350	90,400	15,770	11,463	15,770	14,328
84,400	84,450	14,364	10,154	14,364	12,922	87,400	87,450	15,062	10,814	15,062	13,620	90,400	90,450	15,782	11,474	15,782	14,340
84,450	84,500	14,375	10,165	14,375	12,933	87,450	87,500	15,074	10,825	15,074	13,632	90,450	90,500	15,794	11,485	15,794	14,352
84,500	84,550	14,386	10,176	14,386	12,944	87,500	87,550	15,086	10,836	15,086	13,644	90,500	90,550	15,806	11,496	15,806	14,364
84,550	84,600	14,397	10,187	14,397	12,955	87,550	87,600	15,098	10,847	15,098	13,656	90,550	90,600	15,818	11,507	15,818	14,376
84,600	84,650	14,408	10,198	14,408	12,966	87,600	87,650	15,110	10,858	15,110	13,668	90,600	90,650	15,830	11,518	15,830	14,388
84,650	84,700	14,419	10,209	14,419	12,977	87,650	87,700	15,122	10,869	15,122	13,680	90,650	90,700	15,842	11,529	15,842	14,400
84,700	84,750	14,430	10,220	14,430	12,988	87,700	87,750	15,134	10,880	15,134	13,692	90,700	90,750	15,854	11,540	15,854	14,412
84,750	84,800	14,441	10,231	14,441	12,999	87,750	87,800	15,146	10,891	15,146	13,704	90,750	90,800	15,866	11,551	15,866	14,424
84,800	84,850	14,452	10,242	14,452	13,010	87,800	87,850	15,158	10,902	15,158	13,716	90,800	90,850	15,878	11,562	15,878	14,436
84,850	84,900	14,463	10,253	14,463	13,021	87,850	87,900	15,170	10,913	15,170	13,728	90,850	90,900	15,890	11,573	15,890	14,448
84,900	84,950	14,474	10,264	14,474	13,032	87,900	87,950	15,182	10,924	15,182	13,740	90,900	90,950	15,902	11,584	15,902	14,460
84,950	85,000	14,485		14,485		87,950	88,000	15,194		15,194		90,950	91,000	15,914		15,914
			10,275		13,043				10,935		13,752				11,595		14,472
85,000						88,000						91,000
85,000	85,050	14,496	10,286	14,496	13,054	88,000	88,050	15,206	10,946	15,206	13,764	91,000	91,050	15,926	11,606	15,926	14,484
85,050	85,100	14,507	10,297	14,507	13,065	88,050	88,100	15,218	10,957	15,218	13,776	91,050	91,100	15,938	11,617	15,938	14,496
85,100	85,150	14,518	10,308	14,518	13,076	88,100	88,150	15,230	10,968	15,230	13,788	91,100	91,150	15,950	11,628	15,950	14,508
85,150	85,200	14,529	10,319	14,529	13,087	88,150	88,200	15,242	10,979	15,242	13,800	91,150	91,200	15,962	11,639	15,962	14,520
85,200	85,250	14,540		14,540		88,200	88,250	15,254		15,254		91,200	91,250	15,974		15,974
			10,330		13,098				10,990		13,812				11,650		14,532
85,250	85,300	14,551	10,341	14,551	13,109	88,250	88,300	15,266	11,001	15,266	13,824	91,250	91,300	15,986	11,661	15,986	14,544
85,300	85,350	14,562	10,352	14,562	13,120	88,300	88,350	15,278	11,012	15,278	13,836	91,300	91,350	15,998	11,672	15,998	14,556
85,350	85,400	14,573	10,363	14,573	13,131	88,350	88,400	15,290	11,023	15,290	13,848	91,350	91,400	16,010	11,683	16,010	14,568
85,400	85,450	14,584		14,584		88,400	88,450	15,302		15,302		91,400	91,450	16,022		16,022
			10,374		13,142				11,034		13,860				11,694		14,580
85,450	85,500	14,595	10,385	14,595	13,153	88,450	88,500	15,314	11,045	15,314	13,872	91,450	91,500	16,034	11,705	16,034	14,592
85,500	85,550	14,606	10,396	14,606	13,164	88,500	88,550	15,326	11,056	15,326	13,884	91,500	91,550	16,046	11,716	16,046	14,604
85,550	85,600	14,618	10,407	14,618	13,176	88,550	88,600	15,338	11,067	15,338	13,896	91,550	91,600	16,058	11,727	16,058	14,616
85,600	85,650	14,630	10,418	14,630	13,188	88,600	88,650	15,350	11,078	15,350	13,908	91,600	91,650	16,070	11,738	16,070	14,628
85,650	85,700	14,642		14,642		88,650	88,700	15,362		15,362		91,650	91,700	16,082		16,082
			10,429		13,200				11,089		13,920				11,749		14,640
85,700	85,750	14,654	10,440	14,654	13,212	88,700	88,750	15,374	11,100	15,374	13,932	91,700	91,750	16,094	11,760	16,094	14,652
85,750	85,800	14,666	10,451	14,666	13,224	88,750	88,800	15,386	11,111	15,386	13,944	91,750	91,800	16,106	11,771	16,106	14,664
85,800	85,850	14,678	10,462	14,678	13,236	88,800	88,850	15,398	11,122	15,398	13,956	91,800	91,850	16,118	11,782	16,118	14,676
85,850	85,900	14,690		14,690		88,850	88,900	15,410		15,410		91,850	91,900	16,130		16,130
			10,473		13,248				11,133		13,968				11,793		14,688
85,900	85,950	14,702	10,484	14,702	13,260	88,900	88,950	15,422	11,144	15,422	13,980	91,900	91,950	16,142	11,804	16,142	14,700
85,950	86,000	14,714	10,495	14,714	13,272	88,950	89,000	15,434	11,155	15,434	13,992	91,950	92,000	16,154	11,815	16,154	14,712
86,000						89,000						92,000
86,000	86,050	14,726	10,506	14,726	13,284	89,000	89,050	15,446	11,166	15,446	14,004	92,000	92,050	16,166	11,826	16,166	14,724
86,050	86,100	14,738	10,517	14,738	13,296	89,050	89,100	15,458	11,177	15,458	14,016	92,050	92,100	16,178	11,837	16,178	14,736
86,100	86,150	14,750		14,750		89,100	89,150	15,470		15,470		92,100	92,150	16,190		16,190
			10,528		13,308				11,188		14,028				11,848		14,748
86,150	86,200	14,762	10,539	14,762	13,320	89,150	89,200	15,482	11,199	15,482	14,040	92,150	92,200	16,202	11,859	16,202	14,760
86,200	86,250	14,774	10,550	14,774	13,332	89,200	89,250	15,494	11,210	15,494	14,052	92,200	92,250	16,214	11,870	16,214	14,772
86,250	86,300	14,786		14,786		89,250	89,300	15,506		15,506		92,250	92,300	16,226		16,226
			10,561		13,344				11,221		14,064				11,881		14,784
86,300	86,350	14,798		14,798		89,300	89,350	15,518		15,518		92,300	92,350	16,238		16,238
			10,572		13,356				11,232		14,076				11,892		14,796
86,350	86,400	14,810	10,583	14,810	13,368	89,350	89,400	15,530	11,243	15,530	14,088	92,350	92,400	16,250	11,903	16,250	14,808
86,400	86,450	14,822		14,822		89,400	89,450	15,542		15,542		92,400	92,450	16,262		16,262
			10,594		13,380				11,254		14,100				11,914		14,820
86,450	86,500	14,834		14,834		89,450	89,500	15,554		15,554		92,450	92,500	16,274		16,274
			10,605		13,392				11,265		14,112				11,925		14,832
86,500	86,550	14,846		14,846		89,500	89,550	15,566		15,566		92,500	92,550	16,286		16,286
			10,616		13,404				11,276		14,124				11,936		14,844
86,550	86,600	14,858		14,858		89,550	89,600	15,578		15,578		92,550	92,600	16,298		16,298
			10,627		13,416				11,287		14,136				11,947		14,856
86,600	86,650	14,870	10,638	14,870		89,600	89,650	15,590	11,298	15,590		92,600	92,650	16,310	11,958	16,310
					13,428						14,148						14,868
86,650	86,700	14,882		14,882		89,650	89,700	15,602		15,602		92,650	92,700	16,322		16,322
			10,649		13,440				11,309		14,160				11,969		14,880
86,700	86,750	14,894		14,894		89,700	89,750	15,614		15,614		92,700	92,750	16,334		16,334
			10,660		13,452				11,320		14,172				11,980		14,892
86,750	86,800	14,906		14,906		89,750	89,800	15,626		15,626		92,750	92,800	16,346		16,346
			10,671		13,464				11,331		14,184				11,991		14,904
86,800	86,850	14,918		14,918		89,800	89,850	15,638		15,638		92,800	92,850	16,358		16,358
			10,682		13,476				11,342		14,196				12,002		14,916
86,850	86,900	14,930		14,930		89,850	89,900	15,650		15,650		92,850	92,900	16,370		16,370
			10,693		13,488				11,353		14,208				12,013		14,928
86,900	86,950	14,942		14,942		89,900	89,950	15,662		15,662		92,900	92,950	16,382		16,382
			10,704		13,500				11,364		14,220				12,024		14,940
86,950	87,000	14,954		14,954		89,950	90,000	15,674		15,674		92,950	93,000	16,394		16,394
			10,715		13,512				11,375		14,232				12,035		14,952

(Continued)

* This column must also be used by a qualifying widow(er).

-119-

2020 Tax Table — Continued

If line 10			And you are—			If line 10			And you are—			If line 10			And you are—
(taxable						(taxable						(taxable
income) is—						income) is—						income) is—
At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of	At	But	Single	Married	Married	Head of
least	less		filing	filing	a	least	less		filing	filing	a	least	less		filing	filing	a
	than		jointly *	sepa-	house-		than		jointly *	sepa-	house-		than		jointly *	sepa-	house-
				rately	hold					rately	hold					rately	hold
			Your tax is—						Your tax is—						Your tax is—
93,000						96,000						99,000
93,000	93,050	16,406	12,046	16,406	14,964	96,000	96,050	17,126	12,706	17,126	15,684	99,000	99,050	17,846	13,366	17,846	16,404
93,050	93,100	16,418	12,057	16,418	14,976	96,050	96,100	17,138	12,717	17,138	15,696	99,050	99,100	17,858	13,377	17,858	16,416
93,100	93,150	16,430	12,068	16,430	14,988	96,100	96,150	17,150	12,728	17,150	15,708	99,100	99,150	17,870	13,388	17,870	16,428
93,150	93,200	16,442	12,079	16,442	15,000	96,150	96,200	17,162	12,739	17,162	15,720	99,150	99,200	17,882	13,399	17,882	16,440
93,200	93,250	16,454	12,090	16,454	15,012	96,200	96,250	17,174	12,750	17,174	15,732	99,200	99,250	17,894	13,410	17,894	16,452
93,250	93,300	16,466	12,101	16,466	15,024	96,250	96,300	17,186	12,761	17,186	15,744	99,250	99,300	17,906	13,421	17,906	16,464
93,300	93,350	16,478	12,112	16,478	15,036	96,300	96,350	17,198	12,772	17,198	15,756	99,300	99,350	17,918	13,432	17,918	16,476
93,350	93,400	16,490	12,123	16,490	15,048	96,350	96,400	17,210	12,783	17,210	15,768	99,350	99,400	17,930	13,443	17,930	16,488
93,400	93,450	16,502	12,134	16,502	15,060	96,400	96,450	17,222	12,794	17,222	15,780	99,400	99,450	17,942	13,454	17,942	16,500
93,450	93,500	16,514	12,145	16,514	15,072	96,450	96,500	17,234	12,805	17,234	15,792	99,450	99,500	17,954	13,465	17,954	16,512
93,500	93,550	16,526	12,156	16,526	15,084	96,500	96,550	17,246	12,816	17,246	15,804	99,500	99,550	17,966	13,476	17,966	16,524
93,550	93,600	16,538	12,167	16,538	15,096	96,550	96,600	17,258	12,827	17,258	15,816	99,550	99,600	17,978	13,487	17,978	16,536
93,600	93,650	16,550	12,178	16,550	15,108	96,600	96,650	17,270	12,838	17,270	15,828	99,600	99,650	17,990	13,498	17,990	16,548
93,650	93,700	16,562	12,189	16,562	15,120	96,650	96,700	17,282	12,849	17,282	15,840	99,650	99,700	18,002	13,509	18,002	16,560
93,700	93,750	16,574	12,200	16,574	15,132	96,700	96,750	17,294	12,860	17,294	15,852	99,700	99,750	18,014	13,520	18,014	16,572
93,750	93,800	16,586	12,211	16,586	15,144	96,750	96,800	17,306	12,871	17,306	15,864	99,750	99,800	18,026	13,531	18,026	16,584
93,800	93,850	16,598	12,222	16,598	15,156	96,800	96,850	17,318	12,882	17,318	15,876	99,800	99,850	18,038	13,542	18,038	16,596
93,850	93,900	16,610	12,233	16,610	15,168	96,850	96,900	17,330	12,893	17,330	15,888	99,850	99,900	18,050	13,553	18,050	16,608
93,900	93,950	16,622	12,244	16,622	15,180	96,900	96,950	17,342	12,904	17,342	15,900	99,900	99,950	18,062	13,564	18,062	16,620
93,950	94,000	16,634		16,634		96,950	97,000	17,354		17,354		99,950	100,000	18,074		18,074
			12,255		15,192				12,915		15,912				13,575		16,632
94,000						97,000
94,000	94,050	16,646	12,266	16,646	15,204	97,000	97,050	17,366	12,926	17,366	15,924
														$100,000
94,050	94,100	16,658	12,277	16,658	15,216	97,050	97,100	17,378	12,937	17,378	15,936			or over
94,100	94,150	16,670	12,288	16,670	15,228	97,100	97,150	17,390	12,948	17,390	15,948			use the Tax
94,150	94,200	16,682	12,299	16,682	15,240	97,150	97,200	17,402	12,959	17,402	15,960			Computation
94,200	94,250	16,694	12,310	16,694	15,252	97,200	97,250	17,414	12,970	17,414	15,972			Worksheet
94,250	94,300	16,706	12,321	16,706	15,264	97,250	97,300	17,426	12,981	17,426	15,984
94,300	94,350	16,718	12,332	16,718	15,276	97,300	97,350	17,438	12,992	17,438	15,996
94,350	94,400	16,730	12,343	16,730	15,288	97,350	97,400	17,450	13,003	17,450	16,008
94,400	94,450	16,742		16,742		97,400	97,450	17,462		17,462
			12,354		15,300				13,014		16,020
94,450	94,500	16,754	12,365	16,754	15,312	97,450	97,500	17,474	13,025	17,474	16,032
94,500	94,550	16,766	12,376	16,766	15,324	97,500	97,550	17,486	13,036	17,486	16,044
94,550	94,600	16,778	12,387	16,778	15,336	97,550	97,600	17,498	13,047	17,498	16,056
94,600	94,650	16,790	12,398	16,790	15,348	97,600	97,650	17,510	13,058	17,510	16,068
94,650	94,700	16,802		16,802		97,650	97,700	17,522		17,522
			12,409		15,360				13,069		16,080
94,700	94,750	16,814	12,420	16,814	15,372	97,700	97,750	17,534	13,080	17,534	16,092
94,750	94,800	16,826	12,431	16,826	15,384	97,750	97,800	17,546	13,091	17,546	16,104
94,800	94,850	16,838	12,442	16,838	15,396	97,800	97,850	17,558	13,102	17,558	16,116
94,850	94,900	16,850		16,850		97,850	97,900	17,570		17,570
			12,453		15,408				13,113		16,128
94,900	94,950	16,862	12,464	16,862	15,420	97,900	97,950	17,582	13,124	17,582	16,140
94,950	95,000	16,874	12,475	16,874	15,432	97,950	98,000	17,594	13,135	17,594	16,152
95,000						98,000
95,000	95,050	16,886	12,486	16,886	15,444	98,000	98,050	17,606	13,146	17,606	16,164
95,050	95,100	16,898	12,497	16,898	15,456	98,050	98,100	17,618	13,157	17,618	16,176
95,100	95,150	16,910		16,910		98,100	98,150	17,630		17,630
			12,508		15,468				13,168		16,188
95,150	95,200	16,922	12,519	16,922	15,480	98,150	98,200	17,642	13,179	17,642	16,200
95,200	95,250	16,934	12,530	16,934	15,492	98,200	98,250	17,654	13,190	17,654	16,212
95,250	95,300	16,946		16,946		98,250	98,300	17,666		17,666
			12,541		15,504				13,201		16,224
95,300	95,350	16,958		16,958		98,300	98,350	17,678		17,678
			12,552		15,516				13,212		16,236
95,350	95,400	16,970	12,563	16,970	15,528	98,350	98,400	17,690	13,223	17,690	16,248
95,400	95,450	16,982		16,982		98,400	98,450	17,702		17,702
			12,574		15,540				13,234		16,260
95,450	95,500	16,994		16,994		98,450	98,500	17,714		17,714
			12,585		15,552				13,245		16,272
95,500	95,550	17,006		17,006		98,500	98,550	17,726		17,726
			12,596		15,564				13,256		16,284
95,550	95,600	17,018		17,018		98,550	98,600	17,738		17,738
			12,607		15,576				13,267		16,296
95,600	95,650	17,030	12,618	17,030		98,600	98,650	17,750	13,278	17,750
					15,588						16,308
95,650	95,700	17,042		17,042		98,650	98,700	17,762		17,762
			12,629		15,600				13,289		16,320
95,700	95,750	17,054		17,054		98,700	98,750	17,774		17,774
			12,640		15,612				13,300		16,332
95,750	95,800	17,066		17,066		98,750	98,800	17,786		17,786
			12,651		15,624				13,311		16,344
95,800	95,850	17,078		17,078		98,800	98,850	17,798		17,798
			12,662		15,636				13,322		16,356
95,850	95,900	17,090		17,090		98,850	98,900	17,810		17,810
			12,673		15,648				13,333		16,368
95,900	95,950	17,102		17,102		98,900	98,950	17,822		17,822
			12,684		15,660				13,344		16,380
95,950	96,000	17,114		17,114		98,950	99,000	17,834		17,834
			12,695		15,672				13,355		16,392

* This column must also be used by a qualifying widow(er).

-120-

2020 Tax Computation Worksheet—Line 16

See Line 16 in the Instructions for Forms 1040 and 1040-SR to see if you must use the worksheet below to figure your tax.

!

CAUTION

Note. If you’re required to use this worksheet to figure the tax on an amount from another form or worksheet, such as the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, Schedule J, Form 8615, or the Foreign Earned Income Tax Worksheet, enter the amount from that form or worksheet in column (a) of the row that applies to the amount you’re looking up. Enter the result on the appropriate line of the form or worksheet that you’re completing.

Section A—Use if your filing status is Single. Complete the row below that applies to you.

						Tax.
	(a)	(b)	(c)			Subtract (d) from (c).
Taxable income.					(d)	Enter the result here and
	Enter the amount from	Multiplication	Multiply			on Form 1040 or
If line 15 is—	line 15	amount	(a) by (b)	Subtraction amount		1040-SR, line 16
At least $100,000 but not over $163,300	$	× 24% (0.24)	$	$	5,920.50	$
Over $163,300 but not over $207,350	$	× 32% (0.32)	$	$	18,984.50	$
Over $207,350 but not over $518,400	$	× 35% (0.35)	$	$	25,205.00	$
Over $518,400	$	× 37% (0.37)	$	$	35,573.00	$

Section B—Use if your filing status is Married filing jointly or Qualifying widow(er). Complete the row below that applies to you.

						Tax.
	(a)	(b)	(c)			Subtract (d) from (c).
Taxable income.					(d)	Enter the result here and
	Enter the amount	Multiplication	Multiply			on Form 1040 or
If line 15 is—	from line 15	amount	(a) by (b)	Subtraction amount		1040-SR, line 16
At least $100,000 but not over $171,050	$	× 22% (0.22)	$	$	8,420.00	$
Over $171,050 but not over $326,600	$	× 24% (0.24)	$	$	11,841.00	$
Over $326,600 but not over $414,700	$	× 32% (0.32)	$	$	37,969.00	$
Over $414,700 but not over $622,050	$	× 35% (0.35)	$	$	50,410.00	$
Over $622,050	$	× 37% (0.37)	$	$	62,851.00	$

Section C—Use if your filing status is Married filing separately. Complete the row below that applies to you.

						Tax.
	(a)	(b)	(c)			Subtract (d) from (c).
Taxable income.					(d)	Enter the result here and
	Enter the amount from	Multiplication	Multiply			on Form 1040 or
If line 15 is—	line 15	amount	(a) by (b)	Subtraction amount		1040-SR, line 16
At least $100,000 but not over $163,300	$	× 24% (0.24)	$	$	5,920.50	$
Over $163,300 but not over $207,350	$	× 32% (0.32)	$	$	18,984.50	$
Over $207,350 but not over $311,025	$	× 35% (0.35)	$	$	25,205.00	$
Over $311,025	$	× 37% (0.37)	$	$	31,425.50	$

Section D—Use if your filing status is Head of household. Complete the row below that applies to you.

								Tax.
		(a)			(c)			Subtract (d) from (c).
Taxable income.			(b)				(d)	Enter the result here and
		Enter the amount			Multiply			on Form 1040 or
If line 15 is—		from line 15	Multiplication amount		(a) by (b)	Subtraction amount		1040-SR, line 16
At least $100,000 but not over $163,300	$		× 24% (0.24)	$		$	7,362.00	$
Over $163,300 but not over $207,350	$		× 32% (0.32)	$		$	20,426.00	$
Over $207,350 but not over $518,400	$		× 35% (0.35)	$		$	26,646.50	$
Over $518,400	$		× 37% (0.37)	$		$	37,014.50	$

Publication 17 (2020)Page 121

2020 Tax Rate Schedules

The Tax Rate Schedules are shown so you can see the tax rate that applies to all levels of taxable income. Don’t use them to figure your

tax. Instead, see chapter 13.

CAUTION

Schedule X—If your ling status is Single

	If your taxable		The tax is:
	income is:				of the
		But not
	Over—				amount
		over—			over—
	$0	$9,875		10%	$0
9,875		40,125	$987.50 + 12%		9,875
40,125		85,525	4,617.50	+ 22%	40,125
85,525		163,300	14,605.50	+ 24%	85,525
163,300		207,350	33,271.50	+ 32%	163,300
207,350		518,400	47,367.50 + 35%		207,350
518,400			156,235.00	+ 37%	518,400

Schedule Y-1—If your ling status is Married filing jointly or Qualifying widow(er)

	If your taxable		The tax is:
	income is:				of the
		But not
	Over—				amount
		over—			over—
	$0	$19,750		10%	$0
19,750		80,250	$1,975.00 + 12%		19,750
80,250		171,050	9,235.00	+ 22%	80,250
171,050		326,600	29,211.00	+ 24%	171,050
326,600		414,700	66,543.00	+ 32%	326,600
414,700		622,050	94,735.00	+ 35%	414,700
622,050			167,307.50	+ 37%	622,050

Schedule Y-2—If your ling status is Married filing separately

	If your taxable		The tax is:
	income is:				of the
		But not
	Over—				amount
		over—			over—
	$0	$9,875		10%	$0
9,875		40,125	$987.50 + 12%		9,875
40,125		85,525	4,617.50	+ 22%	40,125
85,525		163,300	14,605.50	+ 24%	85,525
163,300		207,350	33,271.50	+ 32%	163,300
207,350		311,025	47,367.50	+ 35%	207,350
311,025			83,653.75	+ 37%	311,025

Schedule Z—If your ling status is Head of household

	If your taxable		The tax is:
	income is:				of the
		But not
	Over—				amount
		over—			over—
	$0	$14,100		10%	$0
14,100		53,700	$1,410.00 + 12%		14,100
53,700		85,500	6,162.00	+ 22%	53,700
85,500		163,300	13,158.00	+ 24%	85,500
163,300		207,350	31,830.00	+ 32%	163,300
207,350		518,400	45,926.00	+ 35%	207,350
518,400			154,793.50	+ 37%	518,400

Page 122Publication 17 (2020)

Your Rights as a Taxpayer

This section explains your rights as a taxpayer and the processes for examination, appeal, collection, and refunds.

The Taxpayer Bill of Rights

1. The Right to Be Informed. Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax ac-counts and to receive clear explan-ations of the outcomes.

2. The Right to Quality Service. Taxpayers have the right to receive prompt, courteous, and professio-nal assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to re-ceive clear and easily understand-able communications from the IRS, and to speak to a supervisor about inadequate service.

3. The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

4. The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to raise objections and provide additional documentation in response to for-mal IRS actions or proposed ac-tions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

5. The Right to Appeal an IRS Decision in an Independent Fo-rum. Taxpayers are entitled to a fair and impartial administrative ap-peal of most IRS decisions, includ-ing many penalties, and have the right to receive a written response regarding the Office of Appeals' decision. Taxpayers generally have the right to take their cases to court.

6. The Right to Finality. Taxpay-ers have the right to know the max-imum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpay-

Publication 17 (2020)

ers have the right to know when the IRS has finished an audit.

7. The Right to Privacy. Taxpay-ers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intru-sive than necessary, and will re-spect all due process rights, in-cluding search and seizure protections, and will provide, where applicable, a collection due process hearing.

8. The Right to Confidentiality. Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrong-fully use or disclose taxpayer re-turn information.

9. The Right to Retain Repre-sentation. Taxpayers have the right to retain an authorized repre-sentative of their choice to repre-sent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low In-come Taxpayer Clinic if they can-not afford representation.

10. The Right to a Fair and Just Tax System. Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying li-abilities, ability to pay, or ability to provide information timely. Taxpay-ers have the right to receive assis-tance from the Taxpayer Advocate Service if they are experiencing fi-nancial difficulty or if the IRS has not resolved their tax issues prop-erly and timely through its normal channels.

Examinations (Audits)

We accept most taxpayers’ returns as filed. If we inquire about your re-turn or select it for examination, it does not suggest that you are dis-honest. The inquiry or examination may or may not result in more tax. We may close your case without change; or, you may receive a re-fund.

The process of selecting a re-turn for examination usually begins in one of two ways. First, we use computer programs to identify re-turns that may have incorrect amounts. These programs may be based on information returns, such

as Forms 1099 and W-2, on stud-ies of past examinations, or on cer-tain issues identified by compli-ance projects. Second, we use information from outside sources that indicates that a return may have incorrect amounts. These sources may include newspapers, public records, and individuals. If we determine that the information is accurate and reliable, we may use it to select a return for exami-nation.

Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, explains the rules and procedures that we fol-low in examinations. The following sections give an overview of how we conduct examinations.

By mail. We handle many exami-nations and inquiries by mail. We will send you a letter with either a request for more information or a reason why we believe a change to your return may be needed. You can respond by mail or you can re-quest a personal interview with an examiner. If you mail us the re-quested information or provide an explanation, we may or may not agree with you, and we will explain the reasons for any changes. Please do not hesitate to write to us about anything you do not un-derstand.

By interview. If we notify you that we will conduct your examination through a personal interview, or you request such an interview, you have the right to ask that the ex-amination take place at a reasona-ble time and place that is conven-ient for both you and the IRS. If our examiner proposes any changes to your return, he or she will explain the reasons for the changes. If you do not agree with these changes, you can meet with the examiner's supervisor.

Repeat examinations. If we ex-amined your return for the same items in either of the 2 previous years and proposed no change to your tax liability, please contact us as soon as possible so we can see if we should discontinue the exami-nation.

Appeals

If you do not agree with the exam-iner's proposed changes, you can appeal them to the Appeals Office of the IRS. Most differences can be settled without expensive and time-consuming court trials. Your

appeal rights are explained in de-tail in both Publication 5, Your Ap-peal Rights and How To Prepare a Protest If You Don't Agree, and Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.

If you do not wish to use the Appeals Office or disagree with its findings, you may be able to take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live. If you take your case to court, the IRS will have the burden of proving certain facts if you kept ad-equate records to show your tax li-ability, cooperated with the IRS, and meet certain other conditions. If the court agrees with you on most issues in your case and finds that our position was largely unjus-tified, you may be able to recover some of your administrative and lit-igation costs. You will not be eligi-ble to recover these costs unless you tried to resolve your case ad-ministratively, including going through the appeals system, and you gave us the information neces-sary to resolve the case.

Collections

Publication 594, The IRS Collec-tion Process, explains your rights and responsibilities regarding pay-ment of federal taxes. It describes:

What to do when you owe taxes. It describes what to do if you get a tax bill and what to do if you think your bill is wrong. It also covers making installment payments, delay-ing collection action, and sub-mitting an offer in compro-mise.

IRS collection actions. It cov-ers liens, releasing a lien, lev-ies, releasing a levy, seizures and sales, and release of property.

IRS certification to the State Department of a seriously de-linquent tax debt, which will generally result in denial of a passport application and may lead to revocation of a pass-port.

Your collection appeal rights are explained in detail in Publica-tion 1660, Collection Appeal Rights.

Innocent spouse relief. Gener-ally, both you and your spouse are each responsible for paying the full amount of tax, interest, and

Page 123

penalties due on your joint return. However, if you qualify for innocent spouse relief, you may be relieved of part or all of the joint liability. To request relief, you must file Form 8857, Request for Innocent Spouse Relief. For more informa-tion on innocent spouse relief, see Publication 971, Innocent Spouse Relief, and Form 8857.

Potential third party contacts. Generally, the IRS will deal directly with you or your duly authorized representative. However, we sometimes talk with other persons if we need information that you have been unable to provide, or to verify information we have re-ceived. If we do contact other per-sons, such as a neighbor, bank, employer, or employees, we will generally need to tell them limited information, such as your name. The law prohibits us from disclos-ing any more information than is necessary to obtain or verify the in-formation we are seeking. Our need to contact other persons may

continue as long as there is activity in your case. If we do contact other persons, you have a right to re-quest a list of those contacted. Your request can be made by tele-phone, in writing, or during a per-sonal interview.

Refunds

You may file a claim for refund if you think you paid too much tax. You must generally file the claim within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. The law gener-ally provides for interest on your re-fund if it is not paid within 45 days of the date you filed your return or claim for refund. Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, has more information on refunds.

If you were due a refund but you did not file a return, you gener-ally must file your return within 3 years from the date the return was

due (including extensions) to get that refund.

Taxpayer Advocate Service

TAS is an independent organiza-tion within the IRS that can help protect your taxpayer rights. We can offer you help if your tax prob-lem is causing a hardship, or you've tried but haven't been able to resolve your problem with the IRS. If you qualify for our assis-tance, which is always free, we will do everything possible to help you. Visit TaxpayerAdvocate.IRS.gov or call 1-877-777-4778.

Tax Information

The IRS provides the following sources for forms, publications, and additional information.

Internet: IRS.gov.

Tax Questions:

IRS.gov/help/tax-law-questions and

How To Get Tax Help.

Forms and Publications: IRS.gov/Forms and IRS.gov/OrderForms.

Small Business Ombudsman: A small business entity can participate in the regulatory process and comment on en-forcement actions of the IRS by calling 1-888-REG-FAIR.

Treasury Inspector General for Tax Administration: You can confidentially report mis-conduct, waste, fraud, or abuse by an IRS employee by calling 1-800-366-4484. Peo-ple who are deaf, hard of hearing, or have a speech dis-ability and who have access to TTY/TDD equipment can call 1-800-877-8339. You can remain anonymous.

How To Get Tax Help

If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.

Preparing and filing your tax re-turn. After receiving all your wage and earnings statements (Form W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other gov-ernment payment statements (Form 1099-G); and interest, divi-dend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax prepara-tion, or hire a tax professional to prepare your return.

Free options for tax prepara-tion. Go to IRS.gov to see your options for preparing and filing your return online or in your local community, if you qualify, which in-clude the following.

Free File. This program lets you prepare and file your fed-eral individual income tax re-turn for free using brand-name tax-preparation-and-filing soft-ware or Free File fillable forms. However, state tax preparation may not be

available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-fil-ing, and direct deposit or pay-ment options.

VITA. The Volunteer Income Tax Assistance (VITA) pro-gram offers free tax help to people with low-to-moderate incomes, persons with disabil-ities, and limited-Eng-lish-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/ VITA, download the free IRS2Go app, or call

800-906-9887 for information on free tax return preparation.

TCE. The Tax Counseling for the Elderly (TCE) program of-fers free tax help for all tax-payers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-rela-ted issues unique to seniors. Go to IRS.gov/TCE, download the free IRS2Go app, or call 888-227-7669 for information on free tax return preparation.

MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource.

Also, the IRS offers Free Fillable Forms, which can be completed online and then filed electronically regardless of income.

Using online tools to help pre-pare your return. Go to IRS.gov/ Tools for the following.

The Earned Income Tax Credit Assistant (IRS.gov/ EITCAssistant) determines if you’re eligible for the earned income credit (EIC).

The Online EIN Application (IRS.gov/EIN) helps you get an employer identification number (EIN).

The Tax Withholding Estimator (IRS.gov/W4App) makes it easier for everyone to pay the correct amount of tax during the year. The tool is a convenient, online way to check and tailor your with-holding. It’s more user-friendly for taxpayers, including retir-ees and self-employed indi-viduals. The features include the following.

– Easy to understand lan-guage.

– The ability to switch be-tween screens, correct previous entries, and skip screens that don’t apply.

– Tips and links to help you determine if you qualify for tax credits and deductions.

– A progress tracker.

– A self-employment tax fea-ture.

– Automatic calculation of taxable social security ben-efits.

The First Time Homebuyer Credit Account Look-up (IRS.gov/HomeBuyer) tool provides information on your repayments and account bal-ance.

The Sales Tax Deduction Calculator (IRS.gov/SalesTax) figures the amount you can claim if you itemize deduc-tions on Schedule A (Form 1040).

Getting answers to your tax questions. On IRS.gov, you can get

up-to-date information on current events and changes in tax law.

IRS.gov/Help: A variety of tools to help you get answers to some of the most common tax questions.

IRS.gov/ITA: The Interactive Tax Assistant, a tool that will ask you questions on a num-ber of tax law topics and pro-vide answers.

Page 124

Publication 17 (2020)

IRS.gov/Forms: Find forms, instructions, and publications. You will find details on 2020 tax changes and hundreds of interactive links to help you find answers to your ques-tions.

You may also be able to ac-cess tax law information in your electronic filing software.

Need someone to prepare your tax return? There are various types of tax return preparers, in-cluding tax preparers, enrolled agents, certified public account-ants (CPAs), attorneys, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:

Primarily responsible for the overall substantive accuracy of your return,

Required to sign the return, and

Required to include their pre-parer tax identification number (PTIN).

Although the tax preparer al-ways signs the return, you're ulti-mately responsible for providing all the information required for the preparer to accurately prepare your return. Anyone paid to pre-pare tax returns for others should have a thorough understanding of tax matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.

Coronavirus. Go to IRS.gov/ Coronavirus for links to information on the impact of the coronavirus, as well as tax relief available for in-dividuals and families, small and large businesses, and tax-exempt organizations.

Tax reform. Tax reform legislation affects individuals, businesses, and tax-exempt and government entities. Go to IRS.gov/TaxReform for information and updates on how this legislation affects your taxes.

Employers can register to use Business Services Online. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure online W-2 filing op-tions to CPAs, accountants, enrol-led agents, and individuals who process Form W-2, Wage and Tax Statement, and Form W-2c, Cor-rected Wage and Tax Statement.

IRS social media. Go to IRS.gov/ SocialMedia to see the various so-

Publication 17 (2020)

cial media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are para-mount. We use these tools to share public information with you. Don’t post your SSN or other con-fidential information on social me-dia sites. Always protect your iden-tity when using any social networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related top-ics in English, Spanish, and ASL.

Youtube.com/irsvideos.

Youtube.com/ irsvideosmultilingua.

Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal (IRSVideos.gov) con-tains video and audio presenta-tions for individuals, small busi-nesses, and tax professionals.

Online tax information in other languages. You can find informa-tion on IRS.gov/MyLanguage if English isn’t your native language.

Free interpreter service. Multi-lingual assistance, provided by the IRS, is available at Taxpayer As-sistance Centers (TACs) and other IRS offices. Over-the-phone inter-preter service is accessible in more than 350 languages.

Getting tax forms and publica-tions. Go to IRS.gov/Forms to view, download, or print all of the forms, instructions, and publica-tions you may need. You can also download and view popular tax publications and instructions (in-cluding the Instructions for Forms 1040 and 1040-SR) on mobile de-vices as an eBook at IRS.gov/ eBooks. Or you can go to IRS.gov/ OrderForms to place an order.

Access your online account (in-dividual taxpayers only). Go to IRS.gov/Account to securely ac-cess information about your federal tax account.

View the amount you owe, pay online, or set up an online payment agreement.

Access your tax records on-line.

Review your payment history.

Go to IRS.gov/SecureAccess to review the required identity authentication process.

Using direct deposit. The fastest way to receive a tax refund is to file electronically and choose direct deposit, which securely and elec-tronically transfers your refund di-rectly into your financial account.

Direct deposit also avoids the pos-sibility that your check could be lost, stolen, or returned undelivera-ble to the IRS. Eight in 10 taxpay-ers use direct deposit to receive their refunds. The IRS issues more than 90% of refunds in less than 21 days.

Getting a transcript of your re-turn. The quickest way to get a copy of your tax transcript is to go to IRS.gov/Transcripts. Click on ei-ther “Get Transcript Online” or “Get Transcript by Mail” to order a free copy of your transcript. If you pre-fer, you can order your transcript by calling 800-908-9946.

Reporting and resolving your tax-related identity theft issues.

Tax-related identity theft hap-pens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.

The IRS doesn’t initiate con-tact with taxpayers by email, text messages, telephone calls, or social media chan-nels to request personal or fi-nancial information. This in-cludes requests for personal identification numbers (PINs), passwords, or similar informa-tion for credit cards, banks, or other financial accounts.

Go to IRS.gov/IdentityTheft, the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and busi-nesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.

Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to eligible taxpayers to help prevent the misuse of their SSNs on frau-dulent federal income tax re-turns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN.

Checking on the status of your refund.

Go to IRS.gov/Refunds.

The IRS can’t issue refunds before mid-February 2021 for returns that claimed the EIC or the additional child tax credit (ACTC). This applies to the entire refund, not just the por-tion associated with these credits.

Download the official IRS2Go app to your mobile device to check your refund status.

Call the automated refund hot-line at 800-829-1954.

Making a tax payment. The IRS uses the latest encryption technol-ogy to ensure your electronic pay-ments are safe and secure. You can make electronic payments on-line, by phone, and from a mobile device using the IRS2Go app. Pay-ing electronically is quick, easy, and faster than mailing in a check or money order. Go to IRS.gov/ Payments for information on how to make a payment using any of the following options.

IRS Direct Pay: Pay your indi-vidual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.

Debit or Credit Card: Choose an approved payment pro-cessor to pay online, by phone, or by mobile device.

Electronic Funds Withdrawal: Offered only when filing your federal taxes using tax return preparation software or through a tax professional.

Electronic Federal Tax Payment System: Best option for businesses. Enrollment is required.

Check or Money Order: Mail your payment to the address listed on the notice or instruc-tions.

Cash: You may be able to pay your taxes with cash at a par-ticipating retail store.

Same-Day Wire: You may be able to do same-day wire from your financial institution. Con-tact your financial institution for availability, cost, and cut-off times.

What if I can’t pay now? Go to IRS.gov/Payments for more infor-mation about your options.

Apply for an online payment agreement (IRS.gov/OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full to-day. Once you complete the online process, you will re-ceive immediate notification of whether your agreement has been approved.

Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the

Page 125

Offer in Compromise pro-gram, go to IRS.gov/OIC.

Filing an amended return. You can now file Form 1040-X electron-ically with tax filing software to amend 2019 Forms 1040 and 1040-SR. To do so, you must have e-filed your original 2019 return. Amended returns for all prior years must be mailed. See Tips for taxpayers who need to file an amended tax return and go to IRS.gov/Form1040X for informa-tion and updates.

Checking the status of your amended return. Go to IRS.gov/ WMAR to track the status of Form 1040-X amended returns. Please note that it can take up to 3 weeks from the date you filed your amen-ded return for it to show up in our system, and processing it can take up to 16 weeks.

Understanding an IRS notice or letter you’ve received. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

Contacting your local IRS office. Keep in mind, many questions can be answered on IRS.gov without visiting an IRS Taxpayer Assis-tance Center (TAC). Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, IRS TACs provide tax help when a tax issue can’t be han-dled online or by phone. All TACs now provide service by appoint-ment, so you’ll know in advance

that you can get the service you need without long wait times. Be-fore you visit, go to IRS.gov/ TACLocator to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Lo-cal Offices.”

The Taxpayer Advocate Service (TAS) Is Here To Help You

What Is TAS?

TAS is an independent organiza-tion within the IRS that helps tax-payers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.

How Can You Learn About Your Taxpayer Rights?

The Taxpayer Bill of Rights de-scribes 10 basic rights that all tax-payers have when dealing with the

IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.

What Can TAS Do For You?

TAS can help you resolve prob-lems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything pos-sible to resolve your issue. TAS can help you if:

Your problem is causing finan-cial difficulty for you, your fam-ily, or your business;

You face (or your business is facing) an immediate threat of adverse action; or

You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.

How Can You Reach TAS?

TAS has offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s num-ber is in your local directory and at TaxpayerAdvocate.IRS.gov/ Contact-Us. You can also call them at 877-777-4778.

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect many taxpay-ers. If you know of one of these

broad issues, please report it to them at IRS.gov/SAMS.

TAS for Tax

Professionals

TAS can provide a variety of infor-mation for tax professionals, in-cluding tax law updates and guid-ance, TAS programs, and ways to let TAS know about systemic prob-lems you’ve seen in your practice.

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax prob-lems with the IRS, such as audits, appeals, and tax collection dis-putes. In addition, clinics can pro-vide information about taxpayer rights and responsibilities in differ-ent languages for individuals who speak English as a second lan-guage. Services are offered for free or a small fee for eligible tax-payers. To find a clinic near you, visit TaxpayerAdvocate.IRS.gov/ about/LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List.

	To help us develop a more useful index, please let us know if you have ideas for index entries.

Index
	See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

10% tax for early withdrawal from IRA or retirement

plan (See Early withdrawal from deferred interest account, subheading: Tax on)

401(k) plans:

Tax treatment of contributions 49

403(b) plans:

Rollovers 82, 88

529 plans (See Qualified tuition programs)

59 1/2 rule:

Age 59 1/2 rule 85 60-day rule 81

72 rule:

Age 72 rule 83

A

Abroad, citizens traveling or working 7, 51

(See also Foreign employment) Absence, temporary 27, 33 Accelerated death benefits 68 Accidental death benefits 48 Accident insurance 47

Cafeteria plans 52 Long-term care 47, 52

Accounting methods 12

Credits:

Aliens:

Accrual method (See

Accrual

Married filing separately

22

Dual-status (See Dual-status

method taxpayers)

Employer assistance 48

taxpayers)

Cash method (See Cash method

Taxpayer identification

Filing required 7

taxpayers)

number

12, 36

Nonresident

Nonresident (See

Accounting periods 12

Age:

aliens)

Calendar year 10,

12

, 47

Children's

Resident (See Resident aliens)

investments (See Children,

Alimony:

Change in, standard

deduction

not allowed 90

subheading: Investment

Reporting of income 72

Fiscal year 12,

income of child under age 18)

41

Alternative filing methods:

Gross income and filing

Electronic (See E-file)

Fringe benefits

47

Accrual method

requirements (Table 1-1)

5

Alternative minimum tax

taxpayers 12

Taxes paid during tax year,

IRAs:

(AMT) 105

deduction of 94

Distribution prior to age

Ambulance

service personnel:

Accuracy-related

59 1/2

85

Life insurance proceeds when

penalties 19

Activities not for profit 72

Distribution

required at age

death in line of duty

68

Address 16

72

83, 85

Amended returns 18

Change

17

Roth IRAs

,

(See also Form 1040

of

86

89

-X)

Foreign

16

Standard

Itemized deduction, change to

deduction for age 65 or

P.O. box

16

older 90

standard deduction

92

income (AGI):

Agents:

to

Adjusted gross

12

Standard deduction, change

Modified (See Modified adjusted

Income paid to

itemized deductions

92

gross income (MAGI))

Signing return

14

American citizens abroad

6

Retirement savings contribution

Age test 27

(See also Citizens outside U.S.)

credit

22

Agricultural

workers (See Farmers)

Employment (See Foreign

Adjustments

105

Agriculture (See Farming)

employment)

Administrators,

Alaska Permanent Fund

American Indians (See Indians)

estate (See Executors and

dividends

72

American Samoa:

administrators)

Income from 7

Alaska Unemployment

Adopted child 27, 33, 36

Compensation Fund 95

Annuities:

Adoption:

Alcoholic beverages:

Decedent's unrecovered

ATIN 12

IRA prohibited transactions in 84

investment in 13

credit 107

IRAs as 76

Child tax

Page 126Publication 17 (2020)

Annuities (Cont.)

Unrecovered investment 103

Bookkeeping (See Recordkeeping

Head of household, qualifying

Compensation 46

Withholding

13, 39

requirements)

person to file as 24

(See also Wages

and salaries)

Breach of contract:

Defined for IRA purposes 76

Annulled marriages:

Social security number to be

Filing status

21

Damages as income

72

obtained

36

Defined for Roth IRA

Anthrax incidents

(See Terrorist

Bribes 72, 100

Care providers

purposes 86

46

attacks)

Brokers:

Credit for

7

Employee 46

Antiques (See Collectibles)

IRAs with 76

(See also

Miscellaneous

compensation 46

Child tax credit)

Appraisal fees

99

Custody of 28

Nonemployee

73

Commissions 77

Archer MSAs

Burial expenses 100

Unemployment

74

Death of child:

70

Contributions

47

Business expenses:

Head of household, qualifying

Computation of tax

13

Armed Forces:

Job search expenses

74

person to file as 24

Equal amounts

13

(See also Veterans benefits)

Reimbursements 38,

Dividends of (See this

Negative amounts

13

46

heading:

Combat zone:

Returning excess

Investment income of child

Rounding off dollars

business

13

Extension to file return 11

expenses 38

under age 18)

Confidential information:

Signing return for spouse

22

Earnings of 7

Privacy Act and paperwork

Business tax credits:

Dependency allotments

34

Claim for refund 19

reduction information 3

Filing requirements:

Disability pay 51

As dependents (Table 1-2) 6

Constructive receipt of

52

Gifts to 54

income 12, 60

Disability pensions

GI Bill benefits 35

Investment

income of child under

Contribution

C

deadline

Military quarters

allotments 34

age 18:

extension

75

Cafeteria plans 52

Dependent filing requirements

Contributions

Real estate taxes when receiving

16, 72

housing allowance 96

Calendar year

(Table 1 -2) 6

contributions)

taxpayers:

(See also Charitable

Rehabilitative program

Accounting periods

10, 12, 47

(See also Campaign contributions)

Interest and dividends 7

payments 51

Filing due date 10

on

Nontaxable combat pay 76

Parents' election to report

Retiree's pay

Form 1040 or 1040-SR 7

Political 101

withholding 36

California Nonoccupational

Retirees' pay:

Disability Benefit Fund

95

Kidnapped 28, 32

Reservist

repayments 77

Taxable income

51

Campaign contributions 72

Convenience fees 99

Signing return,

parent for

Wages

51

child

14

Presidential Election Campaign

Conversion (See specific retirement

Assistance

Fund 13

Standard

or IRA plan)

(See Tax help)

deduction for 90, 91

Assistance, tax (See Tax help)

Campaign

101

Stillborn

28

Cooperative housing:

expenses

ATIN (Adoption taxpayer

Canada:

See Child support)

Real estate taxes, deduction

12

27, 32

Support of (

identification number)

Resident of

Tax credit (See Child tax credit)

of 95

Attachment of wages

12

Cancellation of

66

Transporting school children 75

that are deductible

debt

Taxes

Attachments to return

as

Unearned income of 54

(Table 11-1) 97

13

Exceptions to treatment

income

67

Child support 72

Copyrights:

Attorney contingency fee:

As income

72

Capital assets:

Child tax credit

Infringement damages 72

7, 25, 106–108

Attorney fees,

whistleblower

Coal and iron ore 70

Claiming the

Royalties 70

credit 108

awards:

Capital expenses 35

Limit on credit 108

Coronavirus-

related

As income

72

Limits 22

distributions

75

Capital gains or losses:

Attorneys' fees

100, 101

Hobbies, sales from

Married

Corporations

68

filing separately 22

time to

collections 74

Chronic illness:

(See also S

Automatic extension

of

corporations)

file 10

Sale of personal

Accelerated payment of life

Director fees as self-employment

items 74, 75

Form

10

Car pools 72

insurance

income

73

4868

Carrybacks:

proceeds (See Accelerated

Errors)

Awards (See Prizes and awards)

Corrections (See

Business tax credit

death benefits)

Cost basis:

carrybacks 19

Long-term care (See Long-term

IRAs for nondeductible

B

Cars 49, 75

care insurance contracts)

contributions 80, 83

(See

Citizen or resident test 27

also

Travel and transportation)

Cost-of-living allowances 47

Babysitting 46

Personal property taxes on,

Citizens outside U.S.:

Coupon bonds 60

for 46

deduction of 98

Earned income exclusion 3

Back pay, award

Court awards and

Emotional distress

Cash:

Employment (See Foreign

damages (See Damages from

damages

under title VII of Civil Rights

Rebates 72

employment)

lawsuits)

Act of 1964 72

Cash method

taxpayers 12

Extension of time to file 11

Cousin 33

Backup withholding

39, 43, 54

Real estate transactions,

Filing requirements 6

tax

Credit cards:

Penalties

39

allocation 95

Withholding from IRA

Benefits, taxability of

Bad debts:

tax year,

distributions

84

insurance 72

Taxes paid during

Claim for refund 18

deduction of 94

Civil suits 72

3

Payment of taxes

Recovery

68

Cash rebates

72

(See also

Credit for child and

dependent

Damages from lawsuits)

Balance due

Civil tax penalties (See Penalties)

care expenses 106

105

Casualty insurance:

Bankruptcy:

Reimbursements from 72

Clergy 7

Credit for other dependents 106,

Canceled debt not deemed to be

Casualty losses 99, 102

50

108

Housing

income

67

Real

Certificates of deposit (CDs) 60,

estate taxes when

Claiming the credit 108

Banks:

75

receiving housing

Limit on credit

108

IRAs with

76

also Individual retirement

allowance 96

(See

Qualifying person 108

Barter income

66

arrangements (IRAs))

Credit for the elderly

the

Life insurance proceeds when

or

Definition of

bartering 66

Change of address 17

chaplain died in line of

disabled 106

Form 1099-B 66

duty

68

Credit or debit

Change of name 12, 43

cards:

Basis:

Chaplains:

Pensions

Payment of taxes 10

50

Cost basis:

Life insurance proceeds when

Credits 104, 106

Special income rules 50

IRAs for nondeductible

death in line of duty 68

Clerical help, deductibility

of 99

American

opportunity 22

contributions

80, 83

Charitable contribution

Coal and iron ore

70

Child tax (See Child tax

credit)

deduction:

Beneficiaries

73

Standard deduction

90

Collectibles:

Credit for other dependents 106

(See also Trust

beneficiaries)

Charitable contributions:

IRA investment in 84

Earned income (See Earned

(See also Estate beneficiaries)

Gifts to reduce public debt 16

income credit)

Colleges and universities:

Bequests

73, 74

Charitable distributions,

Education costs

74

Lifetime learning (See Lifetime

(See also

qualified 83

(See also Qualified

tuition

learning credit)

Estate beneficiaries)

(See also Inheritance)

Checks:

programs)

Custodial fees

100

Birth of child

28

Constructive receipt of 12

Combat zone:

Custody of child

28

Check -writing fees 101

Extension to file return 11

Head of household, qualifying

person to file as

24

Child, qualifying 27

Signing return for spouse

22

Social security number

to be

care credit:

Commissions 38

Child and dependent

D

obtained 36

Married filing separately

22

Advance

46

Birth of dependent

33

Child born alive 28

IRAs with

Damages from lawsuits 72

brokers 77

Blind persons:

Child care:

74

Dating your return 13

Sharing of (kickbacks)

Exemption from withholding 38

Babysitting

46

Unearned, deduction for

Daycare centers

46

Standard deduction for

Care providers

46

repayment of 46

90, 91

(See also Child care)

Bonds:

Expenses

35

21

Deadlines (See Due dates)

Common law marriage

Amortization of premium

102

Child custody

Community property 6,

Death (See Decedents)

28

56

Issued at discount 59

Children 48

IRAs 77

Death benefits:

59

(See also

Married

filing separately 23

Accelerated

68

Original issue discount

Adoption)

Sale of

59

Additional child tax credit

108

Commuting expenses 101

Life insurance

proceeds (See Life

Savings

Employer-provided

insurance)

56

Adoption (See Adopted child)

commuter

59

Babysitters

46

vehicle 49

Tax-exempt

Bonuses 38, 46

Birth of child:

, 74

Publication 17 (2020)Page 127

Death benefits (Cont.)

Public safety officers who died or

Military and government

Education:

Errors:

were killed in line of duty, tax

pensions

52

Savings bond program 58

Corrected wage and tax

exclusion 68

benefits

71

statement

43

Public assistance

Educational assistance:

Employer-provided 48

Death of child 28

Reporting of disability pension

Discovery after filing, need to

33

income

52

Scholarships (See

amend return

17

Death of dependent

Scholarships

Debt instruments (See

Bonds or

Retirement,

pensions, and

and fellowships)

Refunds 17

Notes)

profit-sharing plans 52

Tuition (See Qualified tuition

Escrow:

Debts 18, 68

Signing of return by

programs)

Taxes placed in, when

court-appointed

Education credits:

deductible

96

(See also

Bad debts)

Canceled (See Cancellation of

representative 14

Married filing separately 22

Estate beneficiaries:

debt)

Social security and

Education expenses:

IRAs (See Individual retirement

railroad

Nonrecourse 66

retirement benefits,

Employer-provided (See Educatio

arrangements (IRAs))

Paid by another

12

deductions for 65

nal assistance)

Losses of estate

73

16

53

Tuition (See Qualified tuition

Receiving income

Public, gifts to reduce

Workers' compensation

from estate 73

Recourse 66

Disabled:

programs)

Estates 73

against

8, 14

Child 27

E-file 3, 5, 7

(See also

Refund offset

Estate beneficiaries)

Deceased

33

Income 73

Dependent

Extensions of time to file 10

taxpayers (See Decedents)

Act of 1988:

On time filing 10

Tax 98,

Disaster Assistance

102

Decedents 6

Withholding

39

EIC (See Earned

(See

income credit)

also Estate tax)

Disaster relief

Elderly or disabled, credit for:

Estate tax:

(See also Executors and

52, 71

administrators)

Married filing separately 22

Deduction

98

(See also Terrorist

attacks)

Deceased spouse

6

Disaster Relief and Emergency

Elderly persons:

Estimated:

Due dates 10

Assistance Act:

Credit for (See Elderly or

Credit for

43

6

Grants 71

disabled, credit for)

Payment

41

Filing requirements

vouchers

Savings bonds

57

Exemption from withholding

38

Estimated tax 36

Unemployment

Spouse's death

assistance 70

Home for the aged

34

to avoid

21

Amount to pay

90

Grants or payments

Long-term care (See

penalty 41

Standard deduction

71

Long-term

Declaration of rights of

taxpayers:

Disclosure statement

19

care insurance contracts)

Avoiding

39

IRS request for information 3

Discount, bonds and

notes issued

Nutrition Program for the

Change in

estimated tax 41

Deductions 68, 90

at 59

Elderly 72

Credit for

36, 42

Definition

(See also Recovery of amounts

Distributions:

Standard deduction for age 65 or

36

previously deducted)

Qualified charitable

83

older 90

Divorced

43

taxpayers

Casualty losses

102

Required minimum

41

Tax Counseling for the Elderly 9

Figuring amount of tax

filing, need

distributions 81, 83

Election precinct officials:

First period, no income

Changing claim after

subject to

to amend 18

Fees, reporting of

73

estimated tax in

41

(See also Individual

retirement

Itemizing (See

arrangements (IRAs))

Elective deferrals:

Fiscal year taxpayers

Itemized

41

deductions)

Dividends:

Limits 49

Married taxpayers 40

Pass-through entities

100

Alaska Permanent

Electronic

Name change

43

filing (See E-file)

Repayments 69

Fund (See Alaska Permanent

Electronic payment options

3

Not required 39

Social security

Fund dividends)

Electronic reporting:

Overpayment

and railroad

applied to 14

retirement benefits

65

Fees to collect 100

Returns (See E-file)

Payments

15, 41

Standard deduction 90

when canceled

Embezzlement:

Figuring

, 92

Stockholder debts

amount of each

Student loan interest

as 67

Reporting embezzled funds

74

payment

41

deduction (See Student

Divorced

Emergency medical service

Schedule

41

parents 28, 32

loans)

Divorced taxpayers

personnel:

41

72

When to start

Theft loss 102

(See also Alimony)

Life insurance proceeds when

Who must make

40

Child custody 28

death in line of duty 68

Payment vouchers

Deferred compensation:

42

Limit 49

Estimated tax

72

36,

payments 43

Emotional distress damages

Penalty for underpayment

47

Filing status

21

Employee benefits

47, 48

41, 43 , 44

Nonqualified plans

Delinquent taxes:

IRAs 77, 82

(See also Fringe benefits)

Saturday, Sunday, holiday

Real estate transactions, tax

Real

Employee business expenses:

rule 41

estate taxes, allocation

allocation 96

of 96

Reimbursements

38, 46

Separate

returns

43

Delivery services

Domestic

Returning excess

Social security or

10

help, can’t be claimed

38

railroad

De minimis benefits

48

as dependent 25

Employee expenses:

retirement benefits

63

Dependents 7 , 25

Domestic help:

Home computer

100

State and local income

taxes,

(See also Child

credit)

Withholding

36

deduction of

94

tax

Miscellaneous 99

Birth of 33

Donations (See

Charitable

Employees 38, 47

Unemployment

, 48

Born and

12, 36

contributions)

compensation 71

died within year

(See also Fringe

benefits)

Death of 33

Down payment assistance

72

Awards for service

46

Excise taxes

83

Dual-status taxpayers

7

Business

Filing requirements:

(See also Penalties)

Earned income, unearned

22

expenses (See Employee

Deductibility (Table 11 -1) 97

Joint returns not available

income, and gross income

Standard deduction

90

business expenses)

IRAs for failure to take minimum

levels (Table 1-2)

6

Due dates 9, 10

Form W-4 to be filled out when

distributions

83

Married, filing joint return

starting new job 37

Roth IRAs

88

26, 29

2020 dates

(Table 1-5) 10

Qualifying child

27

Extension (See Extension

Fringe benefits 38

gross income:

of time

Exclusions from

Qualifying relative

32

to file)

Accelerated death benefits 68

Jury duty pay 74

12

Nonresident aliens' returns 10

Overseas

Canceled debt 67

Social security number

Adoption taxpayer

Dues:

employment (See Foreign

for

Commuting benefits

identification number 12,

Club 101

employment)

employees 49

36

Dwelling

Employers:

48

units:

De minimis benefits

dependents

36

Cooperative (See Cooperative

Educational assistance

Disability pensions of

Alien

federal

Standard deduction for

91

housing)

from (See Educational

employees and military 52

claim

assistance)

Educational assistance from

Dependents not allowed to

dependents 26

test

26

E-file options 9

employer

48

Bond

Dependent taxpayer

E

Form W-4, having new

Education Savings

Depletion allowance

70

employees fill out 37

Program 74

Deposits:

Early withdrawal from deferred

Overseas

limit on

Elective deferrals,

Loss on 100

interest account:

employment (See Foreign

exclusion

49

Depreciation:

Higher education expenses,

employment)

46

Employee awards

Home computer

100

exception from penalty

76

Withholding rules

37

Energy conservation

Differential wage

47

IRAs:

Employment:

subsidies

72, 75

payments

Differential wages:

Early distributions,

Agency fees 72

Foreign earned

3

income

Wages for reservists:

defined 85

Taxes:

Frozen deposit interest

74

Military reserves 51

Penalties

FICA withholding 11

Group-term life insurance

49

83, 85

Direct deposit of refunds

14

Earned income:

Long-term care insurance

(See also Withholding)

Directors' fees 73

Defined:

Employment taxes

36, 37, 42

contracts

52, 53

For purposes of standard

Endowment proceeds

Parking fees,

Disabilities, persons with:

67

Accrued leave payment

52

deduction 91

Energy assistance

72

employer -provided

49

Armed forces 51

Dependent filing

Energy conservation:

died or

requirements

Public safety officers who

Blind (See Blind

persons)

(Table 1-2) 6

Measures and modifications 72

were killed in line of duty,

Cafeteria plans

52

106

Subsidies 72

death benefits 68

Earned income credit

Credit for (See

Filing claim

7

75

Sale of home

74

Elderly or

Utility rebates

disabled, credit for)

Married filing

separately 22

Equitable relief (

See

Innocent

Scholarships

75

Insurance costs

52

spouse relief)

Strike benefits

75

Page 128Publication 17 (2020)

Executors and administrators

6

Unmarried persons

6, 21

IRAs 84, 85

8853:

Exempt-interest dividends

54

Accelerated death

(See also Single taxpayers)

Presidential Election

Exemptions:

Final return for decedent:

Campaign Fund 13

benefits 68

From withholding 38

Standard deduction

90

Railroad retirement

Archer MSAs

benefits,

and long-term

73

Financial institutions

reporting on 63

care insurance

Expenses paid by another

76

Extension of time to file

10

(See also Banks)

Social security

contracts 47

benefits,

Automatic 10

Financially disabled persons

18

reporting on 63

8857:

U.S.

11

Fines 10, 19, 20

Use of 21, 22

Innocent spouse relief

22

Citizens outside

E-file options

10

8879:

(See also

Penalties)

1040-X:

11

Deductibility 101

Amended individual

Authorization for E-file

Inclusion on return

Firefighters:

return 18

provider to use

Life insurance proceeds when

Annulled

self-selected PIN 9

marriages 21

F

death in line of duty 68

Change of filing status

23

9465:

Volunteer firefighters:

Completing 18

Installment agreement

Failure to comply with tax

IRAs

78

Filing 18

request 16

laws (See Penalties)

Fiscal year

Itemized

deduction, change to

Form 8919:

12, 41

Fair rental value 34

Fishermen:

standard deduction 92

Uncollected social security

Family 7, 107

Estimated tax

40

and Medicare tax on

Standard deduction, change

74

to itemized deductions 92

wages

46

(See also

Children)

Indian fishing rights

(See also Child tax credit)

Food benefits:

1065:

RRB-1042S:

Farmers:

Nutrition program for the

Partnership income 68

Railroad retirement benefits

Estimated tax

40

elderly

72

1098:

for nonresident aliens

61

Food stamps

Mortgage interest

RRB-1099:

Withholding 36

34

Farming:

7, 51

statement 68

Railroad retirement

Foreign employment

Activity not for profit

72

Employment abroad

1099:

benefits 61

51

of

67

Social security and

Taxable income report 11

Schedule 8812:

Canceled debt, treatment

Medicare

Federal employees:

taxes

51

1099-B:

Child tax credit 108

Accrued leave payment

47

U.S. citizen

51

Barter income 66

SS-5:

Cost-of-living allowances

status 51

1099-C:

Social security number

47

Waiver of alien

Disability pensions

52

Foreign governments,

Cancellation of debt 66

request 12, 35

employees

Based on years

of

service 52

of 51

1099-DIV:

SSA-1042S:

Exclusion, conditions for

Foreign

income:

Dividend income

Social security benefits for

52

Terrorist attack

52

Earned income exclusion

3

statement 50

nonresident aliens

61

FECA payments 53

Reporting of 2

1099-G:

SSA-1099:

Federal Employees'

Foreign income

taxes:

State tax refunds

68

Social security benefits

61

Compensation Act (FECA)

Deduction of 95

1099-INT 54, 60

W-2:

payments 53

Form 1116

to

claim credit 98

1099-MISC:

Election precinct officials'

Nonemployee

fees 73

Federal government:

Schedule A or Form 1040 or

Employees (See Federal

1040-SR reporting 98

compensation

73

Employer

-

reported income

employees)

Definition of 94

1099-OID 59

statement 11, 13, 46, 47,

Federal income tax:

Foreign nationals

(See Resident

1099-R:

50

Not deductible:

aliens)

IRA distributions 84, 86

Employer retirement plan

Deductibility (Table 11-1)

97

Foreign students

27

participation indicated

77

Life insurance policy

Federal judges:

Forgiveness of

surrendered for cash 67

Fringe benefits 47, 48

Employer retirement plan

debt (See Cancellation of debt)

Retirement plan

W-2G:

coverage

78

Form 10, 50 , 61

distributions 13

Gambling winnings

Fees 73

1120S:

withholding statement

74

1040

25,

106

(See

specific types of

1040,

S corporation income

68

W-4V:

also

Schedule A:

deductions and income)

Unearned commission,

2555

108

Voluntary withholding

Professional license

102

deduction for repayment

2848:

request 71

and

of

46

Power of attorney and

W-7:

Fellowships (See Scholarships

fellowships)

declaration of

Individual taxpayer

1040, Schedule C:

14, 22

FICA withholding 11, 36, 47

Barter income 66

representative

identification number

(See also Withholding)

46

3115

56

request 36

Child care providers

(See also Social security and

73

3800:

W-7A:

Corporate director fees

Medicare taxes)

Forgiveness of debts

66

General business credit 19

Adoption taxpayer

Fiduciaries 6, 77

Foster-care providers

73

4506

16

identification number

Kickbacks

74

request 13, 36

(See also Executors and

4506-T:

administrators)

Notary fees

73

Tax return transcript

Form(s) 1099 43

(See also Trustees)

Oil, gas, or

request 16

Form 1040:

mineral interest

Fees for services 73

royalties 70

4868

10, 35

Estimated tax payments 43

84

Rental income

Gambling winnings 39

Prohibited transactions

and

Automatic extension of time to

Figuring taxes and credits

expenses 69

file 10, 35

Overpayment offset

62, 104

against next

(See also Worksheets)

1040, Schedule E:

Filing

10

year's tax

42

electronic form

Filing requirements 5–20, 22

Royalties 70

Filing paper form

10

Form 1040-ES:

(See also Married filing

1040, Schedule

SE

50

5329:

Estimated tax

41, 42

separately)

Calendar year filers

10

Alien taxpayer

Required minimum

identification

Form 1040 or 1040-

SR:

Citizens outside U.S.

6

numbers 36

distributions, failure to

Foreign income taxes, deduction

Dependents

6, 7

Armed forces'

retirement

take 85, 86

of

98

-file)

pay

51

56:

A:

Electronic (See

E

Schedule

Extensions 10

providers

46

Notice Concerning Fiduciary

State and local income taxes,

Child care

Gross income

levels

Clergy pension

50

Relationship 14

deduction of 98

(Table 1-1) 5

Corporate director

fees

73

6251

105

State benefit funds,

6

Disability retirement pay

8275:

mandatory contributions

Individual taxpayers

52

Joint filing 21, 22

FECA benefits 53

Disclosure statement

19

to 95

(See also

73

8275-R:

Taxes,

deduction of 98

Joint returns)

Foster-care providers

Late filing

Kickbacks

74

Regulation disclosure

Schedule C:

penalties (See Penalties)

Notary fees

73

statement 20

Real estate or personal

Most taxpayers (Table 1-1) 5

Oil, gas, or

8379:

property taxes on property

mineral interest

royalties 70

Injured spouse claim

14

used in business,

Unmarried persons (See Single

taxpayers)

Rental income

8606:

deduction of 98

and

When to file 10

expenses 69

IRA contributions,

Schedule E:

Where to file

Nondeductible 76, 80, 84

Real estate or personal

16

Wages and salary

Who must file

reporting 46

IRA contributions,

property taxes on rental

5, 7

–

53

Recharacterization of 83

property, deduction of

98

Filing status 6, 20

24

Workers' compensation

Annulled

21

1040-NR:

8615

54

Schedule F:

marriages

Change to, after time

of

filing

18

Nonresident alien return

10

8814

54

Real estate or personal

Divorced taxpayers

21

1040 or 1040-SR:

8815

58

property taxes on property

Head of household

1040 or 1040-SR, Schedule A:

8818

used in business,

21, 23

58

Qualifying person

Charitable contributions

16

8822:

deduction of 98

to file

as 23

1040 or 1040-SR,

Change of address 17

Self-employment tax,

deduction

Joint returns

21

Schedule SE 7

8839:

of

98

Married filing

22

Address 16

Qualified adoption

separately

Surviving spouse 21

Attachments

to

13

expenses 48

Publication 17 (2020)Page 129

Form 1099-K:

Passive activity 23

Clergy 50

Establishing account

76

Payment card and third-party

(See also Passive

activity)

(See Cooperative

Time of 76

Cooperative

network transactions 75

Gambling winnings and

housing)

Where to

76

open account

Form 1099-MISC:

losses 73, 102

Excess contributions

84

Withheld state and local

Withholding

39, 43

Figuring modified AGI

taxes

94

Garbage pickup:

I

(Worksheet 9-1)

80

Deductibility (Table 11-1)

97

Forms to use:

Form 1099-NEC:

Withheld state and local

Garnishment and attachment

12

Icons, use of

3, 4

Form 1099-R for reporting

taxes

94

Gas royalties 70

Identity theft

distributions

84

2, 20

Form 1099-R:

Gems:

Illegal activities:

Form 8606 for

84

nondeductible

Withheld state and local taxes

IRA prohibited transactions in

Reporting of

74

contributions

76

shown on

94

General due dates, estimated

Income 46, 66,

Inherited IRAs 74, 80

72

, 81

Form 1099-S:

tax 41

(See also

Required

Wages and salaries)

distributions 83

Real estate transactions

GI Bill

35

(See also Alimony)

benefits

Interest on, treatment of 76

proceeds

96

Gifts:

Bartering

66

Kay Bailey Hutchison Spousal

Form 1116:

Holiday gifts

48

Canceled

IRAs 77, 78

debts 66

Foreign tax credit 98

Not taxed 74

of

12, 60

Married

Constructive receipt

couples (See this

Form 8332:

To reduce

the

public debt

16

Gross 33

heading: Kay Bailey

Release of exemption to

Gift taxes:

Illegal

Hutchison Spousal IRAs)

activities 75

noncustodial parent 28

Not deductible 98

Interest 53

Modified adjusted gross income

Form W-2:

Gold and silver:

Jury duty

74

(MAGI):

pay

Employer-reported income

IRA investments in 84

Life insurance

67

Computation of

79

proceeds

statement

42

Government employees:

Nonemployee compensation

73

if covered

Effect on deduction

Filing with return

42

Federal (See Federal employees)

Paid to agent

12

by employer retirement

each

Grants, disaster relief 71

12

plan (Table 9-1) 78

Separate form from

Paid to third party

employer

43

Partnership

68

Effect on deduction if

Gratuities (See Tip income)

not

Withheld state

Gross income:

Prepaid 12

covered by employer

and local

taxes

94

Age, higher filing threshold after

Recovery

retirement plan

68

Form W-2c:

65 6

Royalties

70

(Table 9-2)

79

Corrected wage and tax

Defined:

S corporation

68

Worksheet 9-1

80

statement

43

Filing requirements

Tax exempt

80

34

Nondeductible contributions

Form W-2G:

(Table 1-1) 5

Underreported

18

Early withdrawal

85

Gambling winnings withholding

Dependent filing

Income -producing

expenses

99

80

requirements

Tax on earnings on

statement

39, 43

(Table 1 -2) 6

Income taxes:

Ordinary income, distributions

Withheld state

Gross income test

33

Federal (See Federal income tax)

as 83

and local taxes

shown on

94

Foreign (See Foreign income

Penalties:

Group-term life insurance:

Form W-4:

Accidental death benefits

48

taxes)

Early distributions (See Early

Employee withholding allowance

Definition 48

State or local (See State or local

withdrawal from deferred

certificate

37, 39

Exclusion

income taxes)

interest account)

from income:

Form W-4S:

Limitation on

48

Indians:

Excess contributions 84

Sick pay withholding request

38

Permanent benefits

48

Fishing rights

74

Form 8606 not filed for

Form W-4V 39

of 48

Taxes collected

nondeductible

Taxable cost, calculation

by tribal

compensation,

Guam:

governments, deduction

contributions

76, 80

Unemployment

voluntary withholding

Income from

7

of 94

Overstatement of

request 39

Individual

retirement

nondeductible

Foster care:

arrangements (IRAs)

75, 76,

contributions

80

Care providers' payments

73

81, 86

84

H

Prohibited transactions

Child tax credit

107

(See

also Rollovers)

Required distributions, failure

Difficulty-of-care

73

HAMP:

(See also Roth IRAs)

to take 83, 85

payments

Emergency foster care,

Home affordable modification:

Administrative fees 77, 100

Prohibited transactions 84

maintaining space in home

Pay-for-performance 71

Recharacterization of

Age 59 1/2 for distribution

85

for 73

Handicapped

Exception to rule 85

contribution

82

Foster care

payments and

persons (See Disabilities,

Age 72:

Reporting of:

83,

84

expenses

29, 34

persons with)

Distributions required at

Distributions

Foster child

33, 34

Head of household

21, 23

85

of

27,

29,

Recharacterization

51

Health:

76

contributions

83

Foster Grandparent Program

Compensation, defined

Found property

73

Flexible spending

Contribution limits

Required distributions

76, 77

81, 83

Fraud:

arrangement

47

Age 50 or older,

Excess accumulations

77

85

Penalties

19, 38

Health insurance

Under age 50,

47

77

Retirement savings contribution

Reporting

(See also Accident

insurance)

Contributions

credit 22

anonymously to IRS 3

22, 23

Fringe benefits:

Reimbursement arrangement

48

Designating

persons 76

year for which

Self-employed

Accident and health

Savings account

48

contribution is made

77

Taxability:

insurance

47

Health coverage tax

7

Excess

84

Distributions

83

credit

47

Health insurance premiums

35

contribution is

Time of taxation

Accounting period

Filing before

76

Adoption, employer

Health Spa 101

made

77

Transfers permitted

81

assistance 48

80

To Roth IRAs 81

Help (See Tax help)

Nondeductible

, 82

Archer MSA

47

High income taxpayers:

100

contributions

Not required annually 77

Trustee administrative

fees

De minimis benefits 48

Estimated tax

40

Trustee-to-trustee transfers

Roth IRA contribution for

81

Education assistance

Hobbies 100

same year

87

IRA to Roth IRA

88

48

Form W-2

47

Activity

not

for profit 72

Time of

77

Types of 76

Group-term

Losses 74

Withdrawal

before filing due

Withdrawals:

life insurance

premiums

48

41

date

83

Early (See Early withdrawal

Holiday, deadline falling on

Holiday gifts

Holiday gifts 48

Cost basis

83

from deferred interest

48

80,

49

Home:

account)

Retirement planning services

Deduction for

77

Taxable income

47

Aged, home for 34

Participant

Required (See this heading:

covered by

Transportation

23

employer retirement plan

Required distributions)

49

Cost of keeping up

Withholding 38

Worksheet 24

(Table 9-1)

78

Withholding 13, 39, 84

Frozen deposits:

Security system

Participant not

101

covered by

Individual taxpayer

identification

Interest on

74

Homeowners' associations:

employer retirement plan

number (ITIN)

13, 36

IRA rollover

81

Charges:

(Table 9-2)

79

Individual taxpayers

(

Single

period extension

See

Funeral expenses

35

Deductibility (Table 11-1)

97

Phaseout

78

taxpayers)

Funerals:

Hope credit:

Definition of

Information returns 11, 13, 46, 47,

76

Clergy, payment for 50

Married filing separately 22

Distributions:

50

Expenses

100

Host or hostess

67

At age 59 1/2

85

also Form W-2)

(See

(See also Form 1099)

Household furnishings:

Required minimum

Antiques (See Collectibles)

distributions (See this

Partnerships to provide 68

G

Household members 21

heading: Required

Inheritance 73

distributions)

beneficiaries)

22

(See also Head of household)

(See also Estate

Gains and losses

Household workers (See Domestic

Divorced taxpayers 82

IRAs (See Individual retirement

(See also Losses)

help)

Early

arrangements (IRAs))

Early distributions (See

Claim for refund for loss 19

Household workers, can’t claim as

withdrawal from deferred

Not taxed 74

Gambling (See Gambling

dependent 25

interest account)

Inheritance tax:

winnings and losses)

Housing 23

Employer retirement plan

Deductibility of

98

Hobby losses

74

(See also

participants 77, 78

Deduction 98

Home)

Page 130Publication 17 (2020)

Injured spouse

14

Estimated tax 40

Capital 22

Signing of return by

14

Extension for

Casualty

court-appointed

Claim for refund

citizens outside

99, 102

U.S. 11

Gambling

representative 14

Innocent spouse relief:

(See Gambling

Form 8857 22

21

winnings and losses)

Mexico:

Filing status

Joint returns

Fraud penalty

Theft 99, 102

Resident of

27, 32

22

20

Insolvency:

Guardian of spouse, signing

Lost property

101

Military (See Armed

forces)

Canceled debt not deemed to be

as 22

Lotteries and

Mineral royalties 70

raffles 73

income 67

Injured

14

spouse

(See also Gambling winnings and

Ministers (See Clergy)

15

Innocent spouse

losses)

Miscellaneous deductions

98

Installment agreements

22

Insurance:

status alien

Missing children:

Nonresident or dual-

Accident (See Accident

spouse

22

Photographs of, included in IRS

insurance)

Responsibility

for 21

M

publications 3

Life 39, 48

joint 23

Mistakes (See Errors)

Separate return after

(See

Signing 14, 22

MAGI (See Modified adjusted gross

Modified adjusted gross income

also Life insurance)

(See also Group-term life

income (MAGI))

(MAGI):

Social security and railroad

insurance)

retirement benefits 65

Mailing returns (See Tax returns)

IRAs, computation for:

Reimbursements:

State and local income

Married dependents, filing joint

Effect on deduction if covered

taxes,

From casualty insurance 72

deduction of

95

return 26, 29

by employer retirement

Insurance companies:

Joint return test 26

22

plan (Table 9-1) 78, 80

, 29

Married filing

separately

State delinquency proceedings,

Judges, federal:

23

Community property states

Effect on deduction if not

IRA distributions not made

Employer retirement plan

Credits, treatment of

22

covered by employer

due to 85

coverage 78

Deductions:

retirement plan

Changing method from or to

(Table 9-2)

79

Insurance premiums:

Jury duty pay 74

Life 35, 101

itemized deductions

92

Worksheet 9-1

80

Medical

35

Treatment of 22

Roth IRAs, computation for:

Paid in

55

22

Phaseout (Table 9-3)

86

advance

K

Earned income credit

Insurance proceeds:

How to file

22

Worksheet 9-2

85

Dividends, interest on

55

Kickbacks 74

22, 92

55

Itemized deductions

Money market certificates

Installment payments

Kiddie tax (

Children,

One spouse has

Mortgage:

59

See

itemized so

Life 59

subheading: Unearned income

other must as well 90

Relief 66

Interest:

100

of)

Joint state and local income

taxes

Mortgages:

71

Fees to collect

Kidnapped children:

filed, but separate federal

Assistance payments

Frozen deposits

55

Qualifying child

28

returns

94

Discounted mortgage

loan

66

Usurious 55

Qualifying relative

32

Interest:

Rollovers 22

53

and railroad

Refund of 68

Interest income

Social security

Form 1099-INT

11

retirement benefits

63

MSAs (See Medical

savings

Frozen deposits,

74

State and local income

accounts (MSAs))

from

L

taxes 94

Recovery of income, on

Multiple support agreement

35

68

Tenants by the entirety, allocation

Savings bonds

74

Labor unions

38

of real estate taxes

96

Municipal bonds 59

17

75

Married taxpayers 21–23

Mutual funds:

Tax refunds, from

Dues and fees

Interest payments

under union

Nonpublicly offered

100

68

Sick pay withholding

(See also Joint returns)

(See also Mortgages)

agreements

38

(See also Married filing separately)

Canceled debt including

66

Strike and lockout

benefits 75

(See also Tenants by the entirety)

Student loans deduction

Unemployment compensation

Age 65 or older spouse:

22

N

Interference with business

payments from 71

Standard deduction

91

operations:

Late filing 3

Blind spouse:

Name change 12 , 43

Damages as income

72

Penalties

10, 19

Standard deduction

91

National Housing

Act:

Internal Revenue Service

(IRS):

Late payment:

Deceased spouse 5, 6,

21

Mortgage assistance

71

Fraud or misconduct of

Penalties on tax payments 19

(See also Surviving

27

spouse)

National of the United States

employee, reporting

Law enforcement officers:

Dual-status alien spouse 22

Native Americans (See Indians)

anonymously 3

Life insurance proceeds when

Estimated tax 40

Negligence penalties

19

Mission of 4

death in line of duty

68

21

Net operating losses:

Filing status 5, 6,

International

Legal expenses 100, 101

IRAs 77

Refund of carryback 19

employment (See Foreign

Liability insurance:

Spouse covered by employer

New Jersey Nonoccupational

employment)

Reimbursements from 72

plan

77, 78

Disability Benefit Fund

95

International organizations,

License fees:

Living apart

21

New Jersey Unemployment

employees of

51

Deductibility of

98

Nonresident

Compensation Fund

95

alien spouse 13, 22

Internet:

Nondeductibility

of

100

Roth IRAs

86

New York Nonoccupational

Electronic filing over (See E-file)

Life insurance 48, 68

Signatures

Disability Benefit Fund

95

when spouse unable

Investments:

(See also Group

to sign

14

Nobel Prize

74

-term life insurance)

Fees 100

(See also Accelerated death

or railroad

Nominees

59

Social security

54,

101

benefits)

retirement benefits,

Nonemployee

compensation

73

Seminars

IRAs (See Individual

retirement

Form 1099-R for surrender of

taxability 61

Nonresident aliens 7

arrangements (IRAs))

policy for cash 67

Due dates 10

Mass transit passes,

Itemized deductions:

Premiums

101

employer-provided

49

40

Estimated tax

Changing from standard to

Proceeds

Maximum age. The age

restriction

identification

59

Individual taxpayer

itemized deduction (or vice

As income

67

for contributions to a

number (ITIN) 13

versa) 92

traditional IRA has been

Spouse

13

Public safety officers who died or

itemize 91, 92

were killed in line of duty, tax

eliminated. :

Joint

Choosing to

returns not available 22

Form 1040 to be used

exclusion 68

Traditional IRA contributions 75

Separated 23

69

Married filing separately

22, 92

Medical and dental expenses:

90

Surrender of policy for cash 67

Standard deduction

Withholding 39

Reimbursements, treatment

Taxpayer identification

One spouse has itemized

90

Recovery 69

Life insurance

35

of 53

number 36

premiums

Standard

Lifetime learning credit:

Medical

status

51

deduction to be

insurance (See Accident

Waiver of alien

compared with

91

Married filing separately

22

insurance)

Northern Mariana Islands:

State tax, for

92

Limits:

Medical insurance premiums

35

Income from

7

ITIN (See Individual

taxpayer

Miscellaneous deductions 99

Medical savings accounts

Notary fees

73

identification number (ITIN))

Loans 18

(MSAs) 47, 74

Notes:

ITINs (See Individual taxpayer

Debts)

Discounted

47, 59

(See also

(See also Archer MSAs)

identification number (ITIN))

Lobbying expenses 101

Medicare Advantage MSA

74

Received for

47

services

Local assessments:

Medicare 47, 51

Not-for-profit activities

72

Deductibility of

97

(See also

Nursing homes:

Social security and

itemized

Medicare taxes)

Insurance for care

J

Local income taxes,

deductions 92

Benefits 71

in (See Long-term care

Job search:

33

Medicare

Advantage

insurance contracts)

Local law violated

Deduction of expenses for

Lockout benefits

75

MSA (See Medical savings

Nutrition Program for the

Interviews

74

Lodging 34

accounts (MSAs))

Elderly

72

Joint accounts

Long-term

care insurance

Medicare taxes, not support

35

54

Joint returns:

contracts

52

Member of household or

Accounting period

21

Chronically

individual

53, 68

relationship test 32

ill

O

After separate return

23

Exclusion, limit of 53

Mentally incompetent

persons 52

Deceased spouse

21

Qualified services

OASDI 72

defined 53

(See also Disabilities, persons with)

Dependents on

33

Losses 19, 23

taxes:

Occupational

21

(See also

and losses)

Deduction of:

Divorced taxpayers

Gains

Publication 17 (2020)Page 131

Occupational taxes (Cont.)

Taxes that are deductible

Late payment 19

Public debt:

Taxes (See Tax refunds)

(Table 11-1) 97

Negligence 19

Gifts to reduce

16

Rehabilitative program

Office rent, deductibility

of

99

Reportable

Public transportation

passes,

payments 51

transaction

Offset against debts 8, 14

understatements 19

employer-provided 49

Reimbursement

68

Oil, gas, and minerals:

Roth IRAs:

Puerto Rico:

(See also Recovery

6

of amounts

Future production sold 70

Conversion contributions

Residents of

previously deducted)

Royalties from:

withdrawn in 5-year

Employee business

Pulitzer Prize 74

Schedule C or C-EZ

70

period 89

expenses

46

Punitive damages:

Sale of property interest

88

As income 72

Relationship test

70

Excess contributions

27, 32

Options 50

Substantial understatement

of

Relative, qualifying

32

Ordinary

income tax 19

102

gain and loss (See Gains

Relief fund contributions

and losses)

Tax evasion 20

Religious organizations

7

Q

, 50

Original issue discount (OID) 59

Underpayment

(See also Clergy)

of estimated

Other taxes 105

tax 36, 41, 43

Qualified opportunity fund

74

Rental income and expenses:

Outplacement

services

47

20

Qualified plans

81

Increase due to higher real estate

Willful failure to file

Overpayment of tax 14

Withholding 38, 39

taxes:

(See also Rollovers)

(See also Tax refunds)

Pennsylvania

Qualified tuition programs

74

Deductibility (Table 11-1)

97

Unemployment

Overseas work (See Foreign

Compensation Fund 95

Qualifying child 27

Losses from rental real estate

employment)

Pensions

36, 61

Qualifying relative

32

activities 23

Overtime pay 38

(See also

rental 69

Railroad retirement

Personal property

benefits)

Repayments 69

Clergy

50

R

Amount previously included in

income 103

P

Contributions:

Retirement savings

Raffles 73

Railroad retirement benefits 62

Paper vs. electronic

contribution credit

22

Railroad

retirement

Social security benefits

62, 69

return (See E-file)

Taxation of 49

benefits 61–65, 74

Unemployment

Paperwork Reduction Act of

Deductions

65

compensation 70, 71

Decedent's unrecovered

related to

1980 3

investment in 13

Reporting:

Employer retirement plans

Parental

Disability pensions

different from 78

Rollovers 82

52

responsibility (See Children)

49

Elective deferral limitation

Equivalent tier 1 (social security

Required minimum

Parents, divorced or

Employer plans:

equivalent benefit

distributions

81, 83

separated 28

Benefits from previous

(SSEB))

61, 74

(See also Individual

retirement

29

employer's plan

78

Estimated tax

arrangements (IRAs))

Parents who never married

63

Parking fees:

Rollover to IRA

82, 88

Form RRB-1042S

for nonresident

Required minimum distributions

Employer-provided fringe benefit:

aliens 61

(RMDs) 75

Situations in which

no

Exclusion from income 49

coverage 78

members:

Form RRB-1099 61

Rescue squad

Partners and partnerships

Inherited pensions

Joint returns

65

Life insurance proceeds when

100

74

Income 68

Military (See Armed

63

death in line of duty

68

Forces)

Lump-sum election

Unrecovered investment in 103

22, 63

Reservists:

Passive activity:

Married filing separately

Losses 23

Withholding 13, 39

Repayment of benefits

IRAs 78

62

entities 100

Per capita taxes:

Reporting of

63

Pass-through

Repayments 77

Patents:

Deductibility of 98

Taxability of

Residency:

61, 63

Infringement damages 72

Personal exemption

36

Withholding

39

Home outside U.S. (See Citizens

Royalties 70

Personal injury suits:

Not tax

98

outside U.S.)

deductible

Payment of

41

Damages from 72

Withholding for

63

Residency test 27

estimated tax

By check or money order

Personal property:

Resident aliens:

41

Railroad Unemployment

Credit an overpayment 41

Rental income from

69

Insurance Act

53

Estimated tax

40

42

Real estate:

IRA distributions,

withholding

Payment of tax 3, 9, 15, 18,

Personal property taxes:

Deduction of 98

Canceled business debt,

from 84

By credit or debit card 10

Delivery services 10

C, E, or F (Form

treatment of 67

12

Schedule A,

Social security number (SSN)

Estimated tax 15

1040) 98

Spouse treated as 23

Division of real estate taxes 95

Installment

Form 1099-S to report sale

Taxes (See Personal property

Retired Senior Volunteer

agreements (See Installment

taxes)

proceeds

96

Program 51

agreements)

Personal

for services not

Retirees:

Itemized charges

Late payment penalties 19

representatives (See Fiduciarie

deductible

97

Armed forces:

Payments 105, 106

s)

items not

Taxable income 51

Real estate-related

Disaster

Persons with

deductible

97

Retirement planning

49

relief 71

services

Payroll deductions

98

disabilities (See Disabilities,

Transfer taxes

98

Retirement plans 22, 36, 61

Payroll taxes 47

persons with)

Real estate taxes:

(See also Roth IRAs)

(See also Social

security and

Place for filing 16

Assessments (See Local

(See also Railroad retirement

Medicare taxes)

expenses 101

assessments)

benefits)

Political campaign

Peace Corps allowances 51

Political

Cooperative

Clergy 50

Penalties 41, 43

contributions (See Campaign

housing (See Cooperative

Contributions:

Accuracy

contributions)

housing)

Credit for (See Retirement

-

related 19

Backup withholding

39

Power of attorney 14, 22

deduction of

95

savings contribution

Civil penalties 19

See Early

Deduction of:

credit)

Premature distributions

(

Criminal 20

withdrawal from deferred interest

List of deductible taxes

Taxation of

49

Deductibility

101

account)

(Table 11-1)

97

Decedent's unrecovered

Defenses 19

Prepaid:

Schedule A, C, E,

or

F (Form

investment in 13

Estimated

(See this heading:

Insurance 55

1040)

98

Disability pensions

tax

52

Underpayment of estimated

returns

14

of 96

Preparers of tax

Refund, treatment

Elective deferral limitation 49

tax)

Rebates (See Refunds)

Employer plans:

Presidential Election Campaign

Failure to include social security

Fund

13

Recharacterization:

Benefits from previous

number 13, 20

Price reduced

after purchase 67

IRA contributions 82

employer's plan

78

Failure to pay

Principal residence (See Home)

Recordkeeping:

tax 19

Rollover to IRA 82, 88

Form 8606 not filed

Privacy Act and paperwork

Gambling 102

for

Situations in which

no

nondeductible IRA

reduction information

3

used for

coverage 78

Savings bonds

contributions 76, 80

Private delivery services

education 58

Inherited pensions

10

74

Fraud 19, 20

Prizes and awards 46, 74

Recordkeeping

IRAs (See Individual

retirement

requirements 16

Frivolous

submission

20

(See also Bonuses)

Basic records

16

arrangements (IRAs))

tax

Interest on 15

Exclusion from income

46

16

Military (See Armed Forces)

Copies of returns

IRAs:

Electronic records

Withholding 13, 39

Pulitzer, Nobel, and similar

16

Early distributions

85

prizes 74

Gambling 73

contribution

Retirement savings

Excess contributions

84

Scholarship

prizes

75

Period of

17

credit:

retention

Form 8606 not filed for

Professional license

102

Proof of payments

Adjusted gross income limit 22

fees

17

nondeductible

Professional Reputation

Why keep records

Returns, tax (See Tax returns)

102

16

contributions

76, 80

Profit-sharing plans:

Recovery of amounts

previously

Rewards 74

Overstatement of

Withholding 13, 39

deducted 68

Temporary

Rhode Island

nondeductible

Property:

Itemized

Disability Benefit Fund 95

deductions 69

contributions

80

Found

73

68

Rollovers 81

Mortgage interest refund

failure

Stolen

Over multiple years

69

Definition

Required distributions,

75

of 81

to take 83

71

Tax refunds

68

incorrect rollover

Public assistance benefits

Excess due to

Late filing 10, 19

Publications (See Tax help)

Refunds 105

information

85

Exception

68

19

State tax

From 403 plan to IRA 81

Page 132Publication 17 (2020)

Rollovers (Cont.)

From employer's plan to IRA

81,

Schedules A–F, R, SE (Form

Form SSA-1042S for nonresident

Sunday, deadline falling on

41

82

1040) (See Form 1040)

aliens 61

Supplemental wages

38

IRA to IRA 81

Scholarships 29, 33, 35

61

Support test:

From

Form SSA-1099

From IRA to Roth

88

Scholarships

IRAs for recipients

78

Qualifying child

29

IRA

and

fellowships:

of benefits

From Roth IRA to Roth

89

Earned income including 91

Joint returns

65

Qualifying relative

33

IRA

From section 457 plan to IRA

81

75

Surviving spouse:

Exclusion from gross income

Lump-sum election 63

From SIMPLE IRA to Roth

Teaching or research

22, 63

Filing status 21

Married filing separately

IRA 89

fellowships 75

Paid by employer

47

With dependent child 24

Inherited

S corporations

62, 69

IRAs 81

100

Repayment of benefits

Gross income filing requirements

Married filing

22

Shareholders

Repayments

100

(Table 1-1)

5

separately

68

Partial rollovers 81

Reporting of

Life insurance

Section 457 deferred

63

proceeds paid

Reporting:

compensation plans:

Taxability of

to 67

61, 63

From employer's plan to

Rollovers:

Withholding

Single

21

39

filing status

IRA

82

To IRAs

82, 88

63

Tax (See Estate tax)

Withholding for

81

Securities:

IRA to IRA

Not deductible 98

Claim for refund 19

Social security number

(SSN)

12

Taxability 81, 86

Time limits

81

Options 50

Child's 2

(60-day rule)

T

Treatment of 81

Stock appreciation rights 47

Number to be obtained at

Waiting period

between

81

Self-employed persons

98

birth

36

Tables and figures:

Roth IRAs 86–89

(See also Self-employment

Correspondence

with IRS,

Estimated tax, who must make

tax)

(See also

Corporate directors as

73

include SSN

13

payments (Figure 4-A)

41

Rollovers)

Age:

Definition 7

Dependents

2, 12

Filing requirements:

Distributions after age

Foreign

Exception

Dependents (Table 1-2)

6

government or

12

59 1/2 89

international organizations,

penalty 13

Gross income levels

Failure to include

No limit for

contributions

86

U.S. citizens employed by

7

12

(Table 1-1)

5

Form SS-5 to request number

No required distribution

Gross income 6

Nonresident alien spouse 13

Head of household,

qualifying

age

89

IRAs 76

Resident aliens 12

person (Table 2-1) 23

Compensation,

defined 86

7

Ministers

Spouse 6, 13, 14, 21, 22, 67

Individual retirement

Contribution limits

87

Nonemployee

compensation

73

(See also

arrangements (IRAs):

Married taxpayers)

Age 50 or older,

Self-employment tax:

(See also Surviving spouse)

Figuring modified AGI

87

Under age 50,

Deduction of:

Spouse's death

91

(Worksheet 9-1) 80

87

Contributions:

List of deductible taxes

SSN (See Social

86

security number

Modified AGI, effect on

No deduction for

(Table 11-1)

97

(SSN))

deduction if covered by

Roth IRA only

87

Seminars:

Stamps (See Collectibles)

retirement plan at work

Time to make

88

Investment-related

101

Stamp taxes:

(Table 9 -1)

78

To traditional IRA

for same

Senior Companion Program

51

Real estate transactions and

98

Modified AGI, effect

on

year

87

Separated parents

28, 32

Standard deduction 90, 92

deduction if not covered

Conversion

Separated taxpayers

State:

by retirement plan at work

88

21

Definition of

86

Filing status

22, 23

Obligations, interest on

59

(Table 9-2)

79

Distributions:

IRAs 77

State or local governments:

Roth IRAs, effect

of modified

Qualified distributions 89

23

Employees:

AGI on contributions

Nonresident alien spouse

Effect of modified AGI on

Separate returns (See Married

filing

Unemployment

(Table 9-3)

86

contributions (Table 9-3)

86

separately)

compensation 71

AGI

Roth IRAs, modified

Establishing account

86

SEPs (See Simplified employee

92

(Worksheet 9-2) 85

State or local income taxes

Excess contributions

pensions (SEPs))

Deduction of

94

Roth IRA and modified

88

adjusted

IRA transfer to 81, 82

Series EE and E savings

gross income (MAGI)

List of deductible taxes

Modified adjusted

bonds 56

(Table 11-1) 97

phaseout (Table 9-3) 86

gross income

(MAGI):

Series HH

H savings

Schedule A (Form

1040)

98

Standard deduction tables

and

93

Computation (Worksheet

bonds 56

Electronic returns filed with

Taxes that are deductible

9-2)

85

56

federal 8

(Table 11-1)

97

Series I savings bonds

Phaseout

86

Service charges 100

Exception to

deduction

94

Tax returns:

(Table 9-3)

Penalties:

Service Corps of

Federal changes, effect

19

Due dates (Table 1-5) 10

Retired

on

Conversion contributions

Executives (SCORE)

51

Form W-2 to show withheld

Steps to prepare

withdrawn in 5-year

Severance pay

47

taxes 94

(Table 1-6)

11

period 89

Accrued leave

payment

47

Joint state

121

and local returns but

Tax computation worksheet

88

Outplacement services

federal returns filed

Tax Counseling for the Elderly

Excess contributions

47

9

Recharacterizations 82

Short tax year:

separately 94

Tax credits (See Credits)

Spousal contributions

Change in annual accounting

Married filing

94

Taxes, not support

35

86

separately

Taxability 89

period 90

Refunds, treatment of 94

Taxes 36, 94–98, 104

, 95

Withdrawals:

Sick pay:

State or local taxes:

Alternative minimum 105

Excess contributions

88

Collective bargaining

Refunds 68

of

94

Business taxes, deduction

Not taxable 89

agreements 38

Statute of

Deduction of

94

limitations:

13

FECA payments

Claim for refund

15

Schedules

use 98

Rounding off dollars

53

to

Royalties 70

Income 47

Claim for refunds

18

Types of taxes deductible

Railroad

Unemployment

Stillborn child

28

(Table 11-1) 97

Insurance Act

53

rights

47

Stock appreciation

Estate (See Estate tax)

S

Withholding

38

Stock bonus plans

39

Excise (See Excise taxes)

Signatures 13

Stockholders 19

Federal income taxes, not

Safe deposit box 100

14

deductible

98

Agent, use of

(See also Securities)

Joint returns

Debts 67

Foreign taxes

Salaries (See Wages and salaries)

22

94

Sale of home

74

14

meeting

Income tax,

deduction of

95

Mentally incompetent

Stockholders'

Division of real

estate taxes

95

Parent for child 14

expenses 102

Gift taxes 98

Sale of property:

14

Stock options

Physically disabled

50

How to figure

Personal items 74

Signing your return

8

Stocks 19

Income taxes, deduction of

94

Silver (See Gold and

Securities)

Sales and exchanges:

silver)

(See also

Indian tribal government taxes,

Bonds 59

SIMPLE plans:

Stolen funds:

deduction of

94

Saturday,

41

Rollover to Roth IRA 89

Reporting of

75

Inheritance tax

deadline falling on

98

Savings:

Stolen property

Kiddie tax (See

Simplified employee pensions

75

Children,

Bonds 56, 61

(SEPs):

Strike benefits

subheading: Unearned

75

Bonds

IRAs as 76

Student loans:

income of)

used for education 58

Certificate 55, 60

Cancellation of debt 67

Not deductible

98

Single taxpayers 21

Schedule 16,

46

,

50

, 53

Filing requirements

6

Interest deduction:

Personal property

taxes:

(See also

Filing status

6, 21

Married filing separately

22

Deduction of

98

Form 1040 or 1040-SR)

(See also Form 1040)

Gross income

requirements

Students:

Real estate taxes

filing

(See Real

Form 1040, A-F, R, SE (See Form

(Table 1-1) 5

Defined 27

estate taxes)

1040)

Medicare

Exemption

from withholding

38

Tax evasion 20

Social security and

K-1:

taxes:

Foreign 27

Tax-exempt:

K-1, Form 1041 54

Support, not included in

35

Student loans)

Bonds and other obligations

59

Loans (See

Partnership

Social security benefits

61, 65

Scholarships (See Scholarships

Income

102

income 68

34,

S corporation income

68

Deductions related to

65

and fellowships)

Interest

59

Schedule 8812 108

Tuition programs,

Tax -exempt

income

34

Employer retirement plans

Schedule A (Form

different from

78

qualified (See Qualified tuition

Tax figured by IRS

1040):

106

Itemized deductions

92

Estimated tax 63

programs)

Tax help 3, 9, 124

51

Substitute forms 11

Foreign employer

Tax Counseling for the Elderly 9

Publication 17 (2020)Page 133

Tax help (Cont.)

Volunteer counseling (Volunteer

proceeds (See Accelerated

Underpayment penalties

36, 41,

Income Tax Assistance

death benefits)

43

program)

9, 51

Viatical settlements 68

IRS computation 44

Terrorist attacks:

Unearned income:

Taxpayer identification number

(TIN):

Disability pensions for federal

Children 54

Adoption (ATIN) 12

employees

52

Unearned income of

Individual (ITIN)

child (See Children, subheading:

13, 36

Theft losses 99, 102

Social security

Third parties:

Unearned income of)

70

number (See Social security

Designee for IRS to discuss

Unemployment compensation

number (SSN))

return with

13

Credit card insurance paying

72

Tax preference items 105

Income from

taxpayer's property

Mandatory contributions to state

Tax rates

21

paid to 12

funds, deduction of

95

Married

31

Private fund, from 71

filing separately

Tiebreaker rules

(Schedule Y-2) 22

Tip income:

70, 71

Repayment of benefits

Tax refunds:

Allocated tips

38

Reporting on Form 1040

71

Agreement with IRS extending

Withholding 38

Supplemental benefits

71

assessment period, claim

Voluntary benefit fund

Underwithholding 38

based on

19

Total support 34

contributions 102

Bad debts

18

Tour guides:

Withholding 39, 71

Business tax

credit

Free tour for organizing tour

73

Unions 38, 71,

75

carrybacks

19

Trade Act of 1974:

(See also

Labor

unions)

Cashing check

14

Trade readjustment allowances

Unmarried persons (See Single

Check's expiration

date 14

under 70

taxpayers)

Claim for

17–19

(See Individual

Usurious interest

55

Traditional IRAs

retirement arrangements (IRAs))

Utilities:

Limitations

period 18

Litigation

19

Transfer taxes:

Energy conservation

Direct deposit

Real estate transactions and

98

subsidies 72, 75

14

17

Transit passes 49

Rebates 75

Erroneous refunds

Federal income tax

68

refunds

Travel and transportation

Financially disabled 18

expenses:

Foreign tax paid or

19

Commuting expenses:

accrued

V

General rules

8

Employer-provided commuter

Inquiries 9

vehicle

49

Veterans' benefits:

Interest on

17, 19, 55

Expenses paid

for

others 102

Educational assistance

75

Fringe benefits

49

Veterans benefits

51

Late filed returns 3

Limits

18

74

52

Job search expenses

Retroactive determination

Exceptions

18

Parking fees:

Special statute of limitations.

52

More or less than

expected

14

Employer-provided fringe

Viatical settlements 68

Net operating loss carryback

benefit

49

VISTA volunteers

51

19

Offset:

School children,

transporting

Volunteer firefighters:

Against debts 8, 14

of 75

IRAs 78

Transit

Volunteer

Against next year's tax 14

pass 49

work 51

41

Treasury bills,

Tax counseling

(Volunteer

Offset against next year's tax

notes, and

Past-due 9, 17

bonds 58

Income Tax Assistance

Real estate

Treasury

program) 9, 51

taxes, treatment

Inspector General:

of

96

Telephone number to report

Vouchers for payment of tax 41,

Reduced

19

anonymously fraud or

42

State and

misconduct of IRS

local income tax

refunds 94, 95

employee

3

State liability,

effect on 19

Treasury notes 55

W

Under $1

14

Trust beneficiaries:

Withholding

7

Losses of trust

73

W-2 form (See Form W-2)

Receiving income

from trust

73,

Wages and salaries 11, 46–53

Worthless securities 19

Tax returns 10, 13, 21

74

(See also Form W-2)

(See also Due

Accident and health

dates)

Trustees:

(See also Signatures)

Administrative fees 100

insurance 47

(See also Joint Returns)

IRA 100

Accrued leave

47

payment

Tax Returns:

IRAs:

Adoption, employer

Aliens

7

Fees 77

assistance 48

Amended

18, 92

Transfer

from trustee to

46

Advance commissions

Attachments

trustee

81, 88

Allowances and

to returns 13

Child

14

Trusts 73

reimbursements

38, 46

Copies

16

Trust beneficiaries)

47

of

(See also

Archer MSA contributions

Dating of

13

Grantor trusts

73

Awards and prizes

46

Filing of 5

Income 73

Babysitting 46

(See also

Filing requirements)

TTY/TDD

information 124

Back pay awards 46

Forms to use

7

Tuition, benefits under

GI

Bill

35

Bonuses 46

Free preparation

help 9

Tuition:

Child care

providers

46

How to file

11

Qualified

Children's earnings

7

Mailing of

programs (See Qualified

Clergy 50

16

14

tuition programs)

benefits

48

Paid preparer

De minimis

Payment with

15

Tuition programs,

Elective deferrals 49

Private delivery

services 10

qualified (See Qualified tuition

Employee achievement

11

programs)

award 46

Steps to prepare (Table 1-6)

Third party designee 13

Employee

compensation

46

Transcript of

16

Farmworkers 36

Who must file

51

5, 7

U

Foreign employer

Tax table

W-2)

109–120

Form W-2 (See Form

Tax year

U.S. citizen or resident 27

Fringe benefits

47

10–12

(See also

U.S. national 27

Garnished 12

Accounting periods)

Telephones

102

U.S. obligations,

interest 55, 56

Government

cost-of-living

Fraud or

U.S. possessions:

allowances

47

misconduct of IRS

employee, number for

Deduction of income tax paid

Household workers

36

reporting anonymously 3

to 95

Long-term care coverage

47

Temporary absences 27, 33

Income

Military retirees

36, 51

from 7

Tenants:

Military service

U.S. savings bonds:

51

By the entirety

54

Education, used for 22

Miscellaneous

compensation

46

In common 54

Interest on 74

Note for services 47

Tenants by the

entirety:

U.S. Treasury

47

bills, notes, and

Outplacement services

Real estate taxes, allocation

bonds 58

Religious orders

50

when filing separately 96

U.S. Virgin

Restricted property

50

Islands:

Terminal illness:

Income from 7

Dividends on restricted

Accelerated payment of life

stock 50

insurance

Retirement plan contributions by employer 49

Severance pay 47

Sick pay 47, 53

Social security and Medicare taxes paid by employer 47

Stock appreciation rights 47 Stock options 50 Supplemental 38 Volunteer work 51 Withholding (See Withholding)

War zone (See Combat zone)

Washington State Supplemental

Workmen's Compensation

Fund 95

Welfare benefits 34, 71

What's new 1

Where to file 16

Widow/widower (See Surviving

spouse)

Winter energy payments 72 Withholding 11, 36

(See also Form W-2) Agricultural Act of 1949

payments 39

Changing amount withheld 37

For 2022 37

Checking amount of 37

Claim for refund 7

Commodity credit loans 39

Credit for 36, 42

Cumulative wage method 37

Definition 36

Determining amount to

withhold 37

Disaster Assistance Act of 1988 payments 39

Employers, rules for 37

Exemption from 38

Federal income taxes, not

deductible 98

Form W-4:

Provided by employer 37

Fringe benefits 38

Gambling winnings 39, 43

General rules 36

Highest rate, employer must withhold at if no W-4 37

Incorrect form 43

IRA distributions 84

New job 37

Penalties 36, 38, 39

Pensions and annuities 13, 39

Railroad retirement benefits 39,

63

Repaying withheld tax 37

Salaries and wages 36

Separate returns 43

Sick pay 38

Social security benefits 39, 63 State and local income taxes,

deduction for 94 Supplemental wages 38 Tips (See Tip income) Unemployment

compensation 39, 71 Workers' compensation 53

Mandatory contributions to state funds, deduction of 95

Return to work 53

Worksheets:

Head of household status and cost of keeping up home 24

Individual retirement arrangements (IRAs), modified AGI computation (Worksheet 9-1) 80

Roth IRA modified adjusted gross income (MAGI), computation (Worksheet 9-2) 85

Social security or railroad retirement benefits, to figure taxability 62, 63

Support test 30

Wristwatch 102

Write-offs (See Cancellation of debt)

Page 134Publication 17 (2020)

Where To File

Mail your return to the address shown below that applies to you. If you want to use a private delivery service, see Private delivery services in chapter 1.

TIP

Envelopes without enough postage will be returned to you by the post office. Your envelope may need additional postage if it contains more than five pages or is oversized (for example, it is over 1/4 inch thick). Also, include your complete return address.

	THEN send your return to the address	OR send your return to the address
IF you live in...	below if you are requesting a refund or	below if you ARE enclosing a
	are NOT enclosing a payment...	payment (check or money order)...
Alabama, Georgia, North Carolina, South Carolina,	Department of the Treasury	Internal Revenue Service
Tennessee	Internal Revenue Service	P.O. Box 1214
	Kansas City, MO 64999-0002	Charlotte, NC 28201-1214
Alaska, California, Hawaii, Ohio, Washington	Use this address if you file from January	Internal Revenue Service
	1, 2021, through June 18, 2021:
	Department of the Treasury	P.O. Box 802501
		Cincinnati, OH 45280-2501
	Internal Revenue Service
	Fresno, CA 93888-0002
	Starting June 19, 2021, use the following	Internal Revenue Service
	address:
	Department of the Treasury	P.O. Box 802501
		Cincinnati, OH 45280-2501
	Internal Revenue Service
	Ogden, UT 84201-0002
Arkansas, Delaware, Illinois, Indiana, Iowa, Kentucky,	Department of the Treasury	Internal Revenue Service
Maine, Massachusetts, Minnesota, Missouri, New
	Internal Revenue Service	P.O. Box 931000
Hampshire, New Jersey, New York, Oklahoma, Vermont,
Virginia, Wisconsin	Kansas City, MO 64999-0002	Louisville, KY 40293-1000
Arizona, Colorado, Idaho, Kansas, Michigan, Montana,	Department of the Treasury	Internal Revenue Service
Nebraska, Nevada, New Mexico, North Dakota, Oregon,	Internal Revenue Service	P.O. Box 931000
South Dakota, Utah, Wyoming	Ogden, UT 84201-0002	Louisville, KY 40293-1000
Connecticut, District of Columbia, Maryland,	Department of the Treasury	Internal Revenue Service
Pennsylvania, Rhode Island, West Virginia	Internal Revenue Service	P.O. Box 931000
	Ogden, UT 84201-0002	Louisville, KY 40293-1000
Florida, Louisiana, Mississippi, Texas	Department of the Treasury	Internal Revenue Service
	Internal Revenue Service	P.O. Box 1214
	Austin, TX 73301-0002	Charlotte, NC 28201-1214
A foreign country, U.S. possession or territory,* or use an	Department of the Treasury	Internal Revenue Service
APO or FPO address, or file Form 2555 or 4563, or are a	Internal Revenue Service	P.O. Box 1303
dual-status alien	Austin, TX 73301-0215	Charlotte, NC 28201-1303

* If you live in American Samoa, Puerto Rico, Guam, the U.S. Virgin Islands, or the Commonwealth of the Northern Mariana Islands, see Pub. 570.

Publication 17 (2020)Page 135

For Certain Taxpayers

For Most Taxpayers

Outside

the United States

No extension requested

April 15, 2021

June 15, 2021

Automatic extension

October 15, 2021

October 15, 2021