Line 30 –
Penalty on early withdrawal of savings
The Form 1099-INT or Form
1099-OID you received will show the amount of
any penalty you were charged.
Line 31a –
Alimony paid and Line 31b – Recipient’s SSN
If you made payments to or
for your spouse or former spouse under a divorce or
separation instrument, you may be able to take this
deduction. Use Tele Tax topic 452 or see Pub. 504.
Line 32 – IRA
deduction
If you made any
nondeductible contributions to a traditional individual
retirement arrangement (IRA) for 2010, you must report
them on Form 8606. If you made contributions
to a traditional IRA for 2010, you may be able to take an IRA deduction. But you, or your spouse if filing a joint return, must have had earned income to do so. For IRA purposes, earned income
includes alimony and separate maintenance
payments reported on line 11. If you were a
member of the U.S. Armed Forces, earned income
includes any nontaxable combat pay you received. If you were self-employed,
earned income is generally your net earnings from
self-employment if your personal services were a material income-producing factor. For more details, see Pub. 590. A statement should be sent
to you by May 31, 2011, that shows all
contributions to your traditional IRA for
2010. Use the worksheet on pages 30 and 31 to
figure the amount, if any, of your IRA deduction. But
read the following list before you fill in the
worksheet.
1) If you were age 70 ½ at
the
end of 2010, you cannot deduct any contributions made
to your traditional IRA for 2010 or treat them
as nondeductible contributions.
2) You cannot deduct
contributions to a Roth IRA. But you may be able to take
the retirement savings contributions credit
(saver’s credit). See the instructions for line
50. If you are
filing a joint return and you or your spouse
made contributions to both a traditional IRA
and a Roth IRA for2010, do not use the worksheet on pages 30 and 31. Instead, see Pub. 590 to figure the amount, if any,
of your IRA deduction.
3) You cannot deduct
elective deferrals to a 401(k) plan, 403(b) plan, section
457 plan, SIMPLE plan, or the federal Thrift
Savings Plan. These amounts are not included as
income in box 1 of your Form W-2. But you may
be able to take the retirement savings contributions credit. See the instructions for line 50 on page 38.
4) If you made
contributions to your IRA in 2010 that you deducted for 2009, do not include them in the worksheet.
5) If you received income
from a nonqualified deferred compensation plan or nongovernmental
section 457 plan that is included in box 1 of
your Form W-2, or in box 7 of Form 1099-MISC,
do not include that income on line 8 of the
worksheet. The income should be shown in (a)
box 11 of your Form W-2, (b) box 12 of your
Form W-2 with code Z, or (c) box 15b of Form
1099-MISC. If it is not, contact your employer or the
payer for the amount of the income.
6) You must file a joint
return to deduct contributions to your spouse’s IRA.
Enter the total IRA deduction for you and your
spouse on line 32.
7) Do not include
qualified rollover contributions in figuring your deduction. Instead, see the
instructions for lines 15a and 15b that begin on
page 22.
8) Do not include
trustees’ fees that were billed separately and paid by you
for your IRA. These fees can be deducted only
as an itemized deduction on Schedule A.
9) Do not include any
repayments of qualified reservist distributions. You
cannot deduct them. For information on how to report
these repayments, see Qualified reservist repayments in Pub. 590.
10) If the total of your
IRA deduction on line 32 plus any nondeductible contribution to your
traditional IRAs shown on Form 8606 is less than your total traditional IRA contributions
for 2010, see Pub. 590 for special rules.
By April 1 of the year after the year
in which you turn age 70 ½ you must start taking minimum required distributions
from your traditional IRA. If you do not, you may have to pay a 50% additional
tax on the amount that should have been distributed. For details, including how
to figure the minimum required distribution, see Pub. 590.
Were You
Covered by a Retirement Plan?
If you were covered by a retirement
plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP,
SIMPLE, etc.) at work or through self-employment, your IRA deduction may be
reduced or eliminated. But you can still make contributions to an IRA even if
you cannot deduct them. In any case, the income earned on your IRA contributions
is not taxed until it is paid to you. The “Retirement plan” box in box 13 of your
Form W-2 should be checked if you were covered by a plan at work even if you were
not vested in the plan. You are also covered by a plan if you were
self-employed and had a SEP, SIMPLE, or qualified retirement plan.
If you were covered by a retirement
plan and you file Form 2555, 2555-EZ, or 8815,or you exclude employer-provided
adoption benefits, see Pub. 590 to figure the amount, if any, of your IRA
deduction.
Married persons
filing separately
If you were not covered by a
retirement plan but your spouse was, you are considered covered by a plan
unless you lived apart from your spouse for all of 2010.
You may be able to take the retirement
savings contributions credit. See the line 50 instructions.
Line 33 –
Student loan interest deduction
You can take this deduction only if
all of the following apply.
1. You paid interest in 2010 on a
qualified student loan (see below).
2. Your filing status is any status
except married filing separately.
3. Your modified adjusted gross income
(AGI) is less than: $75,000 if single, head of household, or qualifying
widow(er); $150,000 if married filing jointly. Use lines 2 through 4 of the
worksheet below to figure your modified AGI.
4. You, or your spouse if filing
jointly, are not claimed as a dependent on someone else’s (such as your
parent’s) 2010 tax re- turn.
Use the worksheet below to figure your
student loan interest deduction.
Exception
Use Pub. 970 instead of the worksheet
below to figure your student loan interest deduction if you file Form 2555,
2555-EZ, or 4563, or you exclude income from sources within Puerto Rico.
Qualified
student loan
A qualified student loan is any loan
you took out to pay the qualified higher education expenses for any of the
following individuals.
1. Yourself or your spouse.
2. Any person who was your dependent when
the loan was taken out.
3. Any person you could have claimed as
a dependent for the year the loan was taken out except that:
a. The
person filed a joint return,
b. The person had gross income that was equal to or more than the
exemption amount for that year ($3,650 for 2010), or
c. You, or your spouse if filing jointly, could be claimed as a
dependent on someone else’s return. The person for whom the expenses were paid
must have been an eligible student (see this page). However, a loan is not a qualified
student loan if (a) any of the proceeds were used for other purposes, or (b) the
loan was from either a related person or a person who borrowed the proceeds
under a qualified employer plan or a contract purchased under such a plan. To
find out who is a related person, see Pub. 970.
Qualified
higher education expenses
Qualified higher education expenses
generally include tuition, fees, room and board, and related expenses such as
books and supplies. The expenses must be for education in a degree,
certificate, or similar program at an eligible educational institution. An
eligible educational institution includes most colleges, universities, and
certain vocational schools. You must reduce the expenses by the following
benefits.
1. Employer-provided educational assistance
benefits that are not included in box 1of Form(s) W-2.
2. Excludable U.S. series EE and I savings
bond interest from Form 8815.
3. Any nontaxable distribution of
qualified tuition program earnings.
4. Any nontaxable distribution of
Coverdell education savings account earnings.
5. Any scholarship, educational assistance
allowance, or other payment (but not gifts, inheritances, etc.) excluded from
income.
For more details on these expenses,
see Pub. 970.
Eligible
student
An eligible student is a person who:
1. Was enrolled in a degree,
certificate, or other program (including a program of study abroad that was
approved for credit by the institution at which the student was enrolled)
leading to a recognized educational credential at an eligible educational institution,
and
2. Carried at least half the normal full-time
workload for the course of study he or she was pursuing.
Next up: Topic #12 – 2011 Form 1040 Exclusive – Adjusted
Gross Income Part III
No comments:
Post a Comment