| Pub. 530, Tax Information for First-Time Homeowners |
2006 Tax Year |
Publication 530 - Main Contents
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
What You Can and Cannot Deduct
To deduct expenses of owning a home, you must file Form 1040 and itemize your deductions on Schedule A (Form 1040). If you
itemize, you cannot take
the standard deduction. See the Form 1040 instructions if you have questions about whether to itemize your deductions or claim
the standard deduction.
This section explains what expenses you can deduct as a homeowner. It also points out expenses that you cannot deduct. There
are two primary
discussions: taxes and home mortgage interest. Generally, your real estate taxes and home mortgage interest are included in
your house payment.
Your house payment.
If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments.
Your house payment may
include several costs of owning a home. The only costs you can deduct are real estate taxes actually paid to the taxing authority
and interest that
qualifies as home mortgage interest. These are discussed in more detail later.
Here are some expenses, which may be included in your house payment, that cannot be deducted.
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Fire or homeowner's insurance premiums.
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FHA or other mortgage insurance premiums.
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The amount applied to reduce the principal of the mortgage.
Minister's or military housing allowance.
If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you
still can deduct your real
estate taxes and your home mortgage interest. You do not have to reduce your deductions by your nontaxable allowance.
Nondeductible payments.
You cannot deduct any of the following items.
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Insurance,
including fire and comprehensive coverage, and title and mortgage insurance.
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Wages you pay for domestic help.
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Depreciation.
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The cost of utilities, such as gas, electricity, or water.
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Most settlement costs. See Settlement or closing costs under Cost as Basis, later, for more information.
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Forfeited deposits, down payments, or earnest money.
Most state and local governments charge an annual tax on the value of real property. This is called a real estate tax. You
can deduct the tax if it
is based on the assessed value of the real property and the taxing authority charges a uniform rate on all property in its
jurisdiction. The tax must
be for the welfare of the general public and not be a payment for a special privilege granted or service rendered to you.
Deductible Real Estate Taxes
You can deduct real estate taxes imposed on you. You must have paid them either at settlement or closing, or to a taxing authority
(either directly
or through an escrow account) during the year. If you own a cooperative apartment, see Special Rules for Cooperatives, later.
Where to deduct real estate taxes.
Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6.
Real estate taxes paid at settlement or closing.
Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax
year you owned the home. Your
share of these taxes is fully deductible, if you itemize your deductions.
Division of real estate taxes.
For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the
date of sale. You (the buyer) are
treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally,
this information is
included on the settlement statement you get at closing.
You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the
entire amount. You each can
deduct your own share, if you itemize deductions, for the year the property is sold.
Example.
You bought your home on September 1. The property tax year (the period to which the tax relates) in your area is the calendar
year. The tax for the
year was $730 and was due and paid by the seller on August 15.
You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase).
You figure your
deduction for real estate taxes on your home as follows.
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1.
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Enter the total real estate taxes for the real property tax year
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$730
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2.
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Enter the number of days in the property tax year that you owned the property
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122
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3.
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Divide line 2 by 365
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.3342
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4.
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Multiply line 1 by line 3. This is your deduction. Enter it on Schedule A (Form 1040), line 6
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$244
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You can deduct $244 on your return for the year if you itemize your deductions. You are considered to have paid this
amount and can deduct it on
your return even if, under the contract, you did not have to reimburse the seller.
Delinquent taxes.
Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. If you agree to pay delinquent
taxes when you buy your
home, you cannot deduct them. You treat them as part of the cost of your home. See Real estate taxes, later, under Cost as
Basis.
Escrow accounts.
Many monthly house payments include 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 you pay into the escrow account. You can deduct only the real estate taxes that the lender actually paid
from escrow to the taxing
authority. Your real estate tax bill will show this amount.
Refund or rebate of real estate taxes.
If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your
real estate tax deduction by
the amount refunded to you. If the refund or rebate was for real estate taxes paid for a prior year, you may have to include
some or all of the refund
in your income. For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income.
Items You Cannot Deduct as Real Estate Taxes
The following items are not deductible as real estate taxes.
Charges for services.
An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing
authority. You cannot deduct
the charge as a real estate tax if it is:
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A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use),
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A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or
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A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because
it had grown
higher than permitted under a local ordinance).
You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are
included in the bill.
If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it.
Assessments for local benefits.
You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits
include the construction of
streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property.
You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest
charges related to those
benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge.
If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount
of that part to claim the
deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct
any of it.
An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this
section to find how much of
it, if any, you can deduct.
Transfer taxes (or stamp taxes).
You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. If you are the buyer
and you pay them, include them
in the cost basis of the property. If you are the seller and you pay them, they are expenses of the sale and reduce the amount
realized on the sale.
Homeowners association assessments.
You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes
them.
Special Rules for Cooperatives
If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as
other homeowners. As an
owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. You can
deduct your share of the
corporation's deductible real estate taxes if the cooperative housing corporation meets all of the following conditions.
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The corporation has only one class of stock outstanding.
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Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased
by the
corporation.
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No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation.
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The tenant-stockholders pay at least 80% of the corporation's gross income for the tax year. For this purpose, gross income
means all income
received during the entire tax year, including any received before the corporation changed to cooperative ownership.
Tenant-stockholders.
A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well
as an individual. The
tenant-stockholder does not have to live in any of the cooperative's dwelling units. The units that the tenant-stockholder
has the right to occupy can
be rented to others.
Deductible taxes.
You figure your share of real estate taxes in the following way.
-
Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the
corporation.
-
Multiply the corporation's deductible real estate taxes by the number you figured in (1). This is your share of the real estate
taxes.
Generally, the corporation will tell you your share of its real estate tax. This is the amount you can deduct if it
reasonably reflects the cost of
real estate taxes for your dwelling unit.
Refund of real estate taxes.
If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of
real estate taxes paid this year
when it allocates the tax expense to you. Your deduction for real estate taxes the corporation paid this year is reduced by
your share of the refund
the corporation received.
Generally, 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). Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home
building materials if
the tax rate was the same as the general sales tax rate. For information on figuring your deduction, see the Instructions
for Schedule A (Form 1040).
If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your
cost basis in the
home.
This section of the publication gives you basic information about home mortgage interest, including information on interest
paid at settlement,
points, and Form 1098, Mortgage Interest Statement.
Most home buyers take out a mortgage (loan) to buy their home. They then make monthly payments to either the mortgage holder
or someone collecting
the payments for the mortgage holder. (See Your house payment, earlier, under What You Can and Cannot Deduct.)
Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule
A (Form 1040).
However, your deduction may be limited if:
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Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or
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You took out a mortgage for reasons other than to buy, build, or improve your home.
If either of these situations applies to you, you will need to get Publication 936. You also may need Publication 936 if you
later refinance
your mortgage or buy a second home.
Refund of home mortgage interest.
If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax,
you generally must include the
refund in income in the year you receive it. For more information, see Recoveries in Publication 525. The amount of the refund will usually
be shown on the mortgage interest statement you receive from your mortgage lender. See Mortgage Interest Statement, later.
Deductible Mortgage Interest
To be deductible, the interest you pay must be on a loan secured by your main home or a second home. The loan can be a first
or second mortgage, a
home improvement loan, or a home equity loan.
Prepaid interest.
If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest
over the tax years to which it
applies. You can deduct in each year only the interest that qualifies as home mortgage interest for that year. However, there
is an exception that
applies to points, discussed later.
Late payment charge on mortgage payment.
You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection
with your mortgage loan.
Mortgage prepayment penalty.
If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage
interest provided the penalty
is not for a specific service performed or cost incurred in connection with your mortgage loan.
Ground rent.
In some states (such as Maryland), you may buy your home subject to a ground rent. A ground rent is an obligation
you assume to pay a fixed amount
per year on the property. Under this arrangement, you are leasing (rather than buying) the land on which your home is located.
Redeemable ground rents.
If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage
interest. The ground rent is a
redeemable ground rent only if all of the following are true.
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Your lease, including renewal periods, is for more than 15 years.
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You can freely assign the lease.
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You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the
land by paying a
specified amount.
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The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is
entitled.
Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. You
cannot deduct them.
Nonredeemable ground rents.
Payments on a nonredeemable ground rent are not mortgage interest. You can deduct them as rent only if they are a
business expense or if they are
for rental property.
Cooperative apartment.
You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home
mortgage interest if you own a
cooperative apartment and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives.
In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Figure
your share of mortgage
interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate
taxes. For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in
Publication 936.
Refund of cooperative's mortgage interest.
You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the
cooperative receives. The
patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year.
If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can
deduct.
Figure A. Are My Points Fully Deductible This Year? Summary: This flowchart is used to determine if mortgage points are fully deductible for the current tax year.Start. This is the starting of the flowchart.Decision (1). Is the loan secured by your main home?
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IF Yes Continue To Decision (2)
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IF No Continue To Process (a)
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Decision (2). Is the payment of points an established business practice in your area?
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IF Yes Continue To Decision (3)
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IF No Continue To Process (a)
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Decision (3). Were the points paid more than the amount generally charged in your area?
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IF Yes Continue To Process (a)
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IF No Continue To Decision (4)
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Decision (4). Do you use the cash method of accounting?
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IF Yes Continue To Decision (5)
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IF No Continue To Process (a)
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Decision (5). Were the points paid in place of amounts that ordinarily are separately stated on the settlement sheet?
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IF Yes Continue To Process (a)
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IF No Continue To Decision (6)
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Decision (6). Were the funds you provided (other than those you borrowed from your lender or mortgage broker), plus any points the seller
paid, at least as
much as the points charged?Footnote: The funds you provided do not have to have been applied to the points. They can include
a down payment, an escrow deposit, earnest
money, and other funds you paid at or before closing for any purpose.
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IF Yes Continue To Decision (7)
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IF No Continue To Process (a)
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Decision (7). Did you take out the loan to improve your main home?
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IF Yes Continue To Process (b)
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IF No Continue To Decision (8)
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Decision (8). Did you take out the loan to buy or build your main home?
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IF Yes Continue To Decision (9)
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IF No Continue To Process (a)
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Decision (9). Were the points computed as a percentage of the principal amount of the mortgage?
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IF Yes Continue To Decision (10)
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IF No Continue To Process (a)
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Decision (10). Is the amount paid clearly shown as points on the settlement statement?
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IF Yes Continue To Process (b)
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IF No Continue To Process (a)
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Process (a). You cannot fully deduct the points this year. See the discussion on Points.
Process (b). You can fully deduct the points this year.
End. This is the ending of the flowchart.
Mortgage Interest Paid at Settlement
One item that normally appears on a settlement or closing statement is home mortgage interest.
You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). This amount
should be included in
the mortgage interest statement provided by your lender. See the discussion under Mortgage Interest Statement, later. Also, if you pay
interest in advance, see Prepaid interest, earlier, and Points, next.
The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be
called loan origination fees, maximum loan charges, loan discount, or discount points.
A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. See Points paid by the seller, later.
General rule.
You cannot deduct the full amount of points in the year paid. They are prepaid interest, so you generally must deduct
them over the life (term) of
the mortgage.
Exception.
You can deduct the full amount of points in the year paid if you meet all the following tests.
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Your loan is secured by your main home. (Generally, your main home is the one you live in most of the time.)
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Paying points is an established business practice in the area where the loan was made.
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The points paid were not more than the points generally charged in that area.
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You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the
year you pay them.
Most individuals use this method.
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The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal
fees,
inspection fees, title fees, attorney fees, and property taxes.
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The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged.
The funds you
provided do not have to have been applied to the points. They can include a down payment, an escrow deposit, earnest money,
and other funds you paid
at or before closing for any purpose. You cannot have borrowed these funds from your lender or mortgage broker.
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You use your loan to buy or build your main home.
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The points were computed as a percentage of the principal amount of the mortgage.
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The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged
for the
mortgage. The points may be shown as paid from either your funds or the seller's.
Note.
If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct
the full amount of
points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. If you do not itemize
your deductions in the
year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future
year, if any, when you do
itemize your deductions.
Home improvement loan.
You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first
six tests listed earlier.
Refinanced loan.
If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed
earlier, you can fully deduct
the part of the points related to the improvement in the year you paid them with your own funds. You can deduct the rest of
the points over the life
of the loan.
Points not fully deductible in year paid.
If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to
do so), see Points in
chapter 5 of Publication 535, Business Expenses, for the rules on when and how much you can deduct.
Figure A.
You can use Figure A as a quick guide to see whether your points are fully deductible in the year paid.
Amounts charged for services.
Amounts charged by the lender for specific services connected to the loan are not interest. Examples of these charges
are:
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Appraisal fees,
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Notary fees,
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Preparation costs for the mortgage note or deed of trust,
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Mortgage insurance premiums, and
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VA funding fees.
You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. For information about
the tax treatment of
these amounts and other settlement fees and closing costs, see Basis, later.
Points paid by the seller.
The term points includes loan placement fees that the seller pays to the lender to arrange financing for the buyer.
Treatment by seller.
The seller cannot deduct these fees as interest; but, they are a selling expense that reduces the seller's amount
realized. See Publication 523 for
more information.
Treatment by buyer.
The buyer treats seller-paid points as if he or she had paid them. If all the tests under Exception (discussed earlier) are met, the
buyer can deduct the points in the year paid. If any of those tests are not met, the buyer must deduct the points over the
life of the loan.
The buyer must also reduce the basis of the home by the amount of the seller-paid points. For more information about
the basis of your home, see
Basis, later.
Funds provided are less than points.
If you meet all the tests under Exception (discussed earlier) except that the funds you provided were less than the points charged to
you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. In addition, you can deduct
any points paid by the
seller.
Example 1.
When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). You meet all
the tests for deducting
points in the year paid (see Exception), except the only funds you provided were a $750 down payment. Of the $1,000 you were charged for
points, you can deduct $750 in the year paid. You spread the remaining $250 over the life of the mortgage.
Example 2.
The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your
mortgage. In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller).
You spread the remaining
$250 over the life of the mortgage. You must reduce the basis of your home by the $1,000 paid by the seller.
Excess points.
If you meet all the tests under Exception except that the points paid were more than are generally charged in your area (test 3), you
can deduct in the year paid only the points that are generally charged. You must spread any additional points over the life
of the mortgage.
Mortgage ending early.
If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the
year the mortgage ends. A
mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event.
Example.
Dan paid $3,000 in points in 1999 that he had to spread out over the 15-year life of the mortgage. He had deducted $1,400
of these points through
2005.
Dan prepaid his mortgage in full in 2006. He can deduct the remaining $1,600 of points in 2006.
Exception.
If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Instead,
deduct them over the term of the
new loan.
Form 1098.
The mortgage interest statement you receive should show not only the total interest paid during the year, but also
your deductible points paid
during the year. See Mortgage Interest Statement, later.
Where To Deduct Home Mortgage Interest
Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next).
If you did not
receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. See Table 1 for a summary of where to
deduct home mortgage interest and real estate taxes.
If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social
security number (SSN)
or employer identification number (EIN) on the dotted lines next to line 11. The seller must give you this number and you
must give the seller your
SSN. Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet
either of these
requirements may result in a $50 penalty for each failure.
Mortgage Interest Statement
If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage to a mortgage
holder in the course of
that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. The statement
will show the total
interest paid on your mortgage during the year. If you bought a main home during the year, it also will show the deductible
points you paid and any
points you can deduct that were paid by the person who sold you your home. See Points, earlier.
The interest you paid at settlement should be included on the statement. If it is not, add the interest from the settlement
sheet that qualifies as
home mortgage interest to the total shown on Form 1098 or similar statement. Put the total on Schedule A (Form 1040), line
10, and attach a statement
to your return explaining the difference. Write “See attached” to the right of line 10.
A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. If a statement
comes from a
cooperative housing corporation, it generally will show your share of interest.
Your mortgage interest statement for 2006 should be provided or sent to you by January 31, 2007. If it is mailed, you should
allow adequate time to
receive it before contacting the mortgage holder. A copy of this form will be sent to the IRS also.
Example.
You bought a new home on May 3. You paid no points on the purchase. During the year, you made mortgage payments which included
$4,480 deductible
interest on your new home. The settlement sheet for the purchase of the home included interest of $620 for 29 days in May.
The mortgage statement you
receive from the lender includes total interest of $5,100 ($4,480 + $620). You can deduct the $5,100 if you itemize your deductions.
Refund of overpaid interest.
If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098
showing the refund in box 3.
Generally, you must include the refund in income in the year you receive it. See Refund of home mortgage interest, earlier, under Home
Mortgage Interest.
More than one borrower.
If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid
interest on a mortgage that was
for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement
to your return
explaining this. Show how much of the interest each of you paid, and give the name and address of the person who received
the form. Deduct your share
of the interest on Schedule A (Form 1040), line 11, and write “ See attached” to the right of that line.
The mortgage interest credit is intended to help lower-income individuals afford home ownership. If you qualify, you can claim
the credit each year
for part of the home mortgage interest you pay.
Who qualifies.
You may be eligible for the credit if you were issued a mortgage credit certificate (MCC)
from your state or local government. Generally, an MCC is issued only in connection with a new
mortgage for the purchase of your main home.
The MCC will show the certificate credit rate you will use to figure your credit. It also will show the certified indebtedness
amount. Only the
interest on that amount qualifies for the credit. See Figuring the Credit, later.
Table 1. Where To Deduct Interest and Taxes Paid on Your Home
See the text for information on what expenses are eligible.
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IF you are eligible to deduct . . .
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THEN report the amount
on Schedule A (Form 1040) . . .
|
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real estate taxes
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line 6.
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home mortgage interest and points reported on Form 1098
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line 10.
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home mortgage interest not reported on Form 1098
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line 11.
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points not reported on
Form 1098
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line 12.
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You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Contact
your state or local
housing finance agency for information about the availability of MCCs in your area.
How to claim the credit.
To claim the credit, complete Form 8396 and attach it to your Form 1040. Include the credit in your total for Form
1040, line 54; be sure to check
box a on that line.
Reducing your home mortgage interest deduction.
If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by
the amount of the mortgage
interest credit shown on Form 8396, line 3. You must do this even if part of that amount is to be carried forward to 2007.
Selling your home.
If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay)
all or part of the benefit
you received from the MCC program. For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication
523.
Figure your credit on Form 8396.
Mortgage not more than certified indebtedness.
If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter
on Form 8396, line 1, all the
interest you paid on your mortgage during the year.
Mortgage more than certified indebtedness.
If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the
credit on only part of the
interest you paid. To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage
by the following
fraction.
The fraction will not change as long as you are entitled to take the mortgage interest credit.
Example.
Emily bought a home this year. Her mortgage loan is $125,000. The certified indebtedness amount on her MCC is $100,000. She
paid $7,500 interest
this year. Emily figures the interest to enter on Form 8396, line 1, as follows:
Emily enters $6,000 on Form 8396, line 1. In each
later year, she will figure her credit using only 80% of the interest she pays for that year.
Two limits may apply to your credit.
Limit based on credit rate.
If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000.
Limit based on tax.
Your credit (after applying the limit based on the credit rate) generally cannot be more than your regular tax liability
on Form 1040, line 44,
plus any alternative minimum tax on Form 1040, line 45, minus certain other credits. Use Form 8396 to figure this limit.
If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates,
the credit must
be divided based on the interest held by each person.
Example.
John and his brother, George, were issued an MCC. They used it to get a mortgage on their main home. John has a 60% ownership
interest in the home,
and George has a 40% ownership interest in the home. John paid $5,400 mortgage interest this year and George paid $3,600.
The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. The loan amount (mortgage) on their home
is $120,000. The
credit is limited to $2,000 because the credit rate is more than 20%.
John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%)
for a total of $1,350.
His credit is limited to $1,200 ($2,000 × 60%).
George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%)
for a total of $900.
His credit is limited to $800 ($2,000 × 40%).
Table 2. Effect of Refinancing on Your Credit
| IF you get a new (reissued) MCC and the amount of your new mortgage is ... |
THEN the interest you claim on Form 8396, line 1, is* ... |
|
smaller than or equal to the certified indebtedness amount on the new MCC
|
all the interest paid during the year on your new mortgage.
|
|
larger than the certified indebtedness amount on the new MCC
|
interest paid during the year on your new mortgage multiplied by the following fraction.
|
| |
|
| |
|
certified indebtedness
amount on your new MCC
|
|
| |
|
original amount of your
mortgage
|
|
*The credit using the new MCC cannot be more than the credit using the old MCC.
See New MCC cannot increase your credit. |
If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the
credit to the next 3
years or until used, whichever comes first.
Example.
You receive a mortgage credit certificate from State X. This year, your regular tax liability is $1,100, you owe no alternative
minimum tax, and
your mortgage interest credit is $1,700. You claim no other credits. Your unused mortgage interest credit for this year is
$600 ($1,700 -
$1,100). You can carry forward this amount to the next 3 years or until used, whichever comes first.
Credit rate more than 20%.
If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward
any amount more than $2,000
(or your share of the $2,000 if you must divide the credit).
Example.
In the earlier example under Dividing the Credit, John and George used the entire $2,000 credit. The excess $150 for John ($1,350
- $1,200) and $100 for George ($900 - $800) cannot be carried forward to future years, despite the respective tax liabilities
for John and
George.
If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim
the credit on the new
loan. The amount of credit you can claim on the new loan may change. Table 2 summarizes how to figure your credit if you refinance
your original
mortgage loan.
An issuer may reissue an MCC after you refinance your mortgage. If you did not get a new MCC, you may want to contact the
state or local housing
finance agency that issued your original MCC for information about whether you can get a reissued MCC.
Year of refinancing.
In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount
of interest paid on the new
mortgage, and enter the total on Form 8396, line 1.
If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396.
The statement must show the
calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. It must show a separate calculation
for the part of the
year when the new MCC was in effect. Combine the amounts from both calculations for line 3, enter the total on line 3 of the
form, and write “ see
attached” on the dotted line.
New MCC cannot increase your credit.
The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old
MCC.
In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. However,
if either your old loan or your
new loan has a variable (adjustable) interest rate, you will need to check this yourself. In that case, you will need to know
the amount of the credit
you could have claimed using the old MCC.
There are two methods for figuring the credit you could have claimed. Under one method, you figure the actual credit
that would have been allowed.
This means you use the credit rate on the old MCC and the interest you would have paid on the old loan.
If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have
claimed. Under this method,
you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to
the final maturity date of
the old mortgage. The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for
purposes of the Federal
Truth in Lending Act. The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage
indebtedness shown on
the old MCC.
You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based
on the new MCC.
As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage.
District of Columbia First-Time Homebuyer Credit
You may be able to claim a one-time tax credit of up to $5,000 ($2,500 if married filing separately) if you buy a main home
in the District of
Columbia. You must reduce the basis of your home by the amount of the tentative credit.
The credit is not allowed if you acquired your home from certain related persons or by gift or inheritance.
You qualify for the credit if you (and your spouse if you are married) did not have an ownership interest in a main home in
the District of
Columbia for at least 1 year before buying the new home. Individuals with modified adjusted gross income of $90,000 or more
($130,000 or more in the
case of a joint return) cannot claim the credit. Individuals with modified adjusted gross income between $70,000 and $90,000
(between $110,000 and
$130,000 in the case of a joint return) can claim only a reduced credit.
Use Form 8859, District of Columbia First-Time Homebuyer Credit, to figure your credit. See the form and its instructions
for more information.
Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you
later use part of your
home for business purposes or for rent.
While you own your home, you may add certain items to your basis. You may subtract certain other items from your basis. These
items are called
adjustments to basis and are explained later under Adjusted Basis.
It is important that you understand these terms when you first acquire your home because you must keep track of your basis
and adjusted basis
during the period you own your home. You also must keep records of the events that affect basis or adjusted basis. See Keeping Records,
later.
How you figure your basis depends on how you acquire your home. If you buy or build your home, your cost is your basis. If
you receive your home as
a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. If you inherit your
home from a decedent, the
fair market value at the date of the decedent's death is generally your basis. Each of these topics is discussed later.
Fair market value.
This is the price at which property would change hands between a willing buyer and a willing seller, neither being
under any compulsion to buy or
sell and who both have a reasonable knowledge of all the necessary facts.
Property transferred from a spouse.
If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis
is the same as your spouse's
(or former spouse's) adjusted basis just before the transfer. Publication 504, Divorced or Separated Individuals, fully discusses
transfers between
spouses.
The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed.
The cost of your home includes most settlement or closing costs you paid when you bought the home. If you built your home,
your cost includes most
closing costs paid when you bought the land or settled on your mortgage.
If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A
(Form 1040), you cannot
include the sales taxes as part of your cost basis in the home.
Purchase.
The basis of a home you bought is the amount you paid for it. This usually includes your down payment and any debt
you assumed. The basis of a
cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. This amount
includes any purchase
commissions or other costs of acquiring the shares.
Construction.
If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus
the amount you paid to have
the home built. This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building
permit charges,
utility meter and connection charges, and legal fees that are directly connected with building your home. If you built all
or part of your home
yourself, your basis is the total amount it cost you to build it. You cannot include the value of your own labor or any other
labor for which you did
not pay.
Real estate taxes.
Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year
that each owned the home. See
the earlier discussion of Real estate taxes paid at settlement or closing, under Real Estate Taxes, to figure the real estate
taxes you paid or are considered to have paid.
If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller
did not reimburse you, add
those taxes to your basis in the home. You cannot deduct them as taxes paid.
If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can
still deduct those taxes. Do not
include those taxes in your basis. If you did not reimburse the seller, you must reduce your basis by the amount of those
taxes.
Table 3. Adjusted Basis
This table lists examples of some items that generally will increase or decrease your basis in your home. It is not intended
to be
all-inclusive.
|
Increases to Basis
|
Decreases to Basis
|
Improvements:
Assessments for local improvements
(see Assessments for local benefits, under What You Can and Cannot Deduct)
Amounts spent to restore damaged property
|
-
Insurance or other reimbursement for casualty losses
-
Deductible casualty loss not covered by insurance
-
Payments received for easement or right-of-way granted
-
Depreciation allowed or allowable if home is used for business or rental purposes
-
Value of subsidy for energy conservation measure excluded from income
|
Example 1.
You bought your home on September 1. The property tax year in your area is the calendar year, and the tax is due on August
15. The real estate
taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. You did not reimburse
the seller for your share of
the real estate taxes from September 1 through December 31. You must reduce the basis of your home by the $426 [(122 ÷ 365)
× $1,275] the
seller paid for you. You can deduct your $426 share of real estate taxes on your return for the year you purchased your home.
Example 2.
You bought your home on May 3, 2006. The property tax year in your area is the calendar year. The taxes for the previous year
are assessed on
January 2 and are due on May 31 and November 30. Under state law, the taxes become a lien on May 31. You agreed to pay all
taxes due after the date of
sale. The taxes due in 2006 for 2005 were $1,375. The taxes due in 2007 for 2006 will be $1,425.
You cannot deduct any of the taxes paid in 2006 because they relate to the 2005 property tax year and you did not own the
home until 2006. Instead,
you add the $1,375 to the cost (basis) of your home.
You owned the home in 2006 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2007 return of $949
[(243 ÷ 365)
× $1,425] paid in 2007 for 2006. You add the remaining $476 ($1,425 - $949) of taxes paid in 2007 to the cost (basis) of your
home.
Settlement or closing costs.
If you bought your home, you probably paid settlement or closing costs in addition to the contract price. These costs
are divided between you and
the seller according to the sales contract, local custom, or understanding of the parties. If you built your home, you probably
paid these costs when
you bought the land or settled on your mortgage.
The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. You
deduct them in the year you buy
your home if you itemize your deductions. You can add certain other settlement or closing costs to the basis of your home.
Items added to basis.
You can include in your basis the settlement fees and closing costs you paid for buying your home. A fee is for buying
the home if you would have
had to pay it even if you paid cash for the home.
The following are some of the settlement fees and closing costs that you can include in the original basis of your
home.
-
Abstract fees (abstract of title fees).
-
Charges for installing utility services.
-
Legal fees (including fees for the title search and preparation of the sales contract and deed).
-
Recording fees.
-
Surveys.
-
Transfer taxes.
-
Owner's title insurance.
-
Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements
or
repairs, and sales commissions.
If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as
your share of the real estate
taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement.
Items not added to basis and not deductible.
Here are some settlement and closing costs that you cannot deduct or add to your basis.
-
Fire insurance premiums.
-
Charges for using utilities or other services related to occupancy of the home before closing.
-
Rent for occupying the home before closing.
-
Charges connected with getting or refinancing a mortgage loan, such as:
-
FHA or other mortgage insurance premiums and VA funding fees,
-
Loan assumption fees,
-
Cost of a credit report, and
-
Fee for an appraisal required by a lender.
Points paid by seller.
If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the
person who sold you your home.
If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only
if you deducted them. See
Points, earlier, for the rules on deducting points.
To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just
before it was given to
you, its FMV at the time it was given to you, and any gift tax paid on it.
Donor's adjusted basis is more than FMV.
If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the fair market
value, your basis at the time
of receipt is the same as the donor's adjusted basis.
Disposition basis.
If the donor's adjusted basis at the time of the gift is more than the FMV, your basis when you dispose of the property
will depend on whether you
have a gain or a loss.
-
If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home
at the time of
the gift as your basis.
-
If using the fair market value results in a gain, you have neither a gain nor a loss.
Donor's adjusted basis equal to or less than the FMV.
If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or
less than the fair market value,
your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that
is due to the net
increase in value of the home.
Part of federal gift tax due to net increase in value.
Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the
total federal gift tax paid by
a fraction. The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom
part) is the value of
the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to
the gift. The net increase
in the value of the home is its fair market value minus the adjusted basis of the donor.
Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift.
Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on
the alternate valuation
date if the personal representative for the estate chooses to use alternative valuation.
If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return.
If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state
inheritance or
transmission taxes. Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on
the basis of inherited
property.
While you own your home, various events may take place that can change the original basis of your home. These events can increase
or decrease your
original basis. The result is called adjusted basis. See Table 3, earlier, for a list of some of the items that can adjust
your basis.
Improvements.
An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new
uses. You must add the cost of
any improvements to the basis of your home. You cannot deduct these costs.
Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting
up a fence, putting in new
plumbing or wiring, installing a new roof, and paving your driveway.
Amount added to basis.
The amount you add to your basis for improvements is your actual cost. This includes all costs for material and labor,
except your own labor, and
all expenses related to the improvement. For example, if you had your lot surveyed to put up a fence, the cost of the survey
is a part of the cost of
the fence.
You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they
increase the value of the
property. These assessments are discussed earlier under Real Estate Taxes.
Repairs versus improvements.
A repair keeps your home in an ordinary, efficient operating condition. It does not add to the value of your home
or prolong its life. Repairs
include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken
window panes. You
cannot deduct repair costs and generally cannot add them to the basis of your home.
However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements.
You add them to the
basis of your home.
Records to keep.
You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home.
Also see Keeping Records,
later.
Energy conservation subsidy.
If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation
measure for your home,
do not include the value of that subsidy in your income. You must reduce the basis of your home by that value.
An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity
or natural gas or to
improve the management of energy demand.
Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits,
and to know the
basis or adjusted basis of your home. These records include your purchase contract and settlement papers if you bought the
property, or other
objective evidence if you acquired it by gift, inheritance, or similar means. You should keep any receipts, canceled checks,
and similar evidence for
improvements or other additions to the basis. In addition, you should keep track of any decreases to the basis such as those
listed in Table 3.
How to keep records.
How you keep records is up to you, but they must be clear and accurate and must be available to the IRS.
How long to keep records.
You must keep your records for as long as they are important for meeting any provision of the federal tax law.
Keep records that support an item of income, a deduction, or a credit, appearing on a return until the period of limitations
for the return runs
out. (A period of limitations is the period of time after which no legal action can be brought.) For assessment of tax you
owe, this is generally 3
years from the date you filed the return. For filing a claim for credit or refund, this is generally 3 years from the date
you filed the original
return, or 2 years from the date you paid the tax, whichever is later. Returns filed before the due date are treated as filed
on the due date.
You may need to keep records relating to the basis of property (discussed earlier) longer than for the period of limitations.
Keep those records as
long as they are important in figuring the basis of the original or replacement property. Generally, this means for as long
as you own the property
and, after you dispose of it, for the period of limitations that applies to you.
Table 4. Record of Home Improvements
Keep this for your records. Also, keep receipts or other proof of improvements.
|
Remove from this record any improvements that are no longer part of your main home. For example, if you
put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first
carpeting.
|
(a)
Type of Improvement
|
(b)
Date
|
(c)
Amount
|
|
(a)
Type of Improvement
|
(b)
Date
|
(c)
Amount
|
|
Additions:
|
|
|
|
Heating & Air
Conditioning:
|
|
|
|
Bedroom
|
|
|
|
Heating system
|
|
|
|
Bathroom
|
|
|
|
Central air conditioning
|
|
|
|
Deck
|
|
|
|
Furnace
|
|
|
|
Garage
|
|
|
|
Duct work
|
|
|
|
Porch
|
|
|
|
Central humidifier
|
|
|
|
Patio
|
|
|
|
Filtration system
|
|
|
|
Storage shed
|
|
|
|
Other
|
|
|
|
Fireplace
|
|
|
|
Electrical:
|
|
|
|
Other
|
|
|
|
|
|
|
Lawn & Grounds:
|
|
|
|
Lighting fixtures
|
|
|
| |
|
|
Wiring upgrades
|
|
|
|
Landscaping
|
|
|
|
Other
|
|
|
|
Driveway
|
|
|
|
Plumbing:
|
|
|
|
Walkway
|
|
|
|
|
|
|
Fences
|
|
|
|
Water heater
|
|
|
|
Retaining wall
|
|
|
|
Soft water system
|
|
|
|
Sprinkler system
|
|
|
|
Filtration system
|
|
|
|
Swimming pool
|
|
|
|
Other
|
|
|
|
Exterior lighting
|
|
|
|
Insulation:
|
|
|
|
Other
|
|
|
|
|
|
|
Communications:
|
|
|
|
Attic
|
|
|
| |
|
|
Walls
|
|
|
|
Satellite dish
|
|
|
|
Floors
|
|
|
|
Intercom
|
|
|
|
Pipes and duct work
|
|
|
|
Security system
|
|
|
|
Other
|
|
|
|
Other
|
|
|
|
|
|
|
|
Miscellaneous:
|
|
|
|
Interior
Improvements:
|
|
|
|
Storm windows and doors
|
|
|
|
Built-in appliances
|
|
|
|
Roof
|
|
|
|
Kitchen modernization
|
|
|
|
Central vacuum
|
|
|
|
Bathroom modernization
|
|
|
|
Other
|
|
|
|
Flooring
|
|
|
| |
|
|
|
Wall-to-wall carpeting
|
|
|
| |
|
|
|
Other
|
|
|
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information
from the IRS in several
ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
Contacting your Taxpayer Advocate.
The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are
experiencing economic harm,
who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an
IRS system or procedure is
not working as it should.
You can contact the Taxpayer Advocate Service by calling toll-free 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see
if you are eligible for
assistance. You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your
local telephone directory
and in Publication 1546, The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems. You can
file Form 911, Application
for Taxpayer Assistance Order, or ask an IRS employee to complete it on your behalf. For more information, go to
www.irs.gov/advocate.
Low income tax clinics (LITCs).
LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies
with the IRS for free or for
a nominal charge. The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who
speak English as a second
language. Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. It is available
at
www.irs.gov or at your local IRS office.
Free tax services.
To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains a list of
free tax publications and an
index of tax topics. It also describes other free tax information services, including tax education and assistance programs
and a list of TeleTax
topics.
Internet. You can access the IRS website at
www.irs.gov 24 hours a day, 7 days a week to:
-
E-file your return. Find out about commercial tax preparation and e-file services available free to eligible
taxpayers.
-
Check the status of your 2006 refund. Click on Where's My Refund. Wait at least 6 weeks from the date you filed your return (3
weeks if you filed electronically). Have your 2006 tax return available because you will need to know your social security
number, your filing status,
and the exact whole dollar amount of your refund.
-
Download forms, instructions, and publications.
-
Order IRS products online.
-
Research your tax questions online.
-
Search publications online by topic or keyword.
-
View Internal Revenue Bulletins (IRBs) published in the last few years.
-
Figure your withholding allowances using our withholding calculator.
-
Sign up to receive local and national tax news by email.
-
Get information on starting and operating a small business.
Phone. Many services are available by phone.
-
Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications,
and prior-year forms and instructions. You should receive your order within 10 days.
-
Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
-
Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An
employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local
Taxpayer Assistance Center
for an appointment. To find the number, go to
www.irs.gov/localcontacts or
look in the phone book under United States Government, Internal Revenue Service.
-
TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and
publications.
-
TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.
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Refund information. To check the status of your 2006 refund, call 1-800-829-4477 and press 1 for automated refund information or
call 1-800-829-1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically).
Have your 2006 tax
return available because you will need to know your social security number, your filing status, and the exact whole dollar
amount of your refund.
Evaluating the quality of our telephone services. To ensure IRS representatives give accurate, courteous, and professional answers, we
use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to listen
in on or record random
telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk-in. Many products and services are available on a walk-in basis.
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Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and
publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions,
and office supply stores
have a collection of products available to print from a CD or photocopy from reproducible proofs. Also, some IRS offices and
libraries have the
Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
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Services. You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. An
employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. If you need
to resolve a tax problem,
have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone
in person, visit your
local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No
appointment is necessary,
but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue.
A representative will
call you back within 2 business days to schedule an in-person appointment at your convenience. To find the number, go to
www.irs.gov/localcontacts or
look in the phone book under United States Government, Internal Revenue Service.
Mail. You can send your order for forms, instructions, and publications to the address below. You should receive a response within
10
business days after your request is received.
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
CD for tax products. You can order Publication 1796, IRS Tax Products CD, and obtain:
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A CD that is released twice so you have the latest products. The first release ships in January and the final release ships
in
March.
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Current-year forms, instructions, and publications.
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Prior-year forms, instructions, and publications.
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Bonus: Historical Tax Products DVD - Ships with the final release.
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Tax Map: an electronic research tool and finding aid.
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Tax law frequently asked questions.
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Tax Topics from the IRS telephone response system.
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Fill-in, print, and save features for most tax forms.
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Internal Revenue Bulletins.
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Toll-free and email technical support.
Buy the CD from National Technical Information Service (NTIS) at
www.irs.gov/cdorders for $25 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the CD for $25 (plus a $5 handling
fee). Price is subject to change.
CD for small businesses. Publication 3207, The Small Business Resource Guide CD for 2006, is a must for every small business owner or
any taxpayer about to start a business. This year's CD includes:
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Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
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All the business tax forms, instructions, and publications needed to successfully manage a business.
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Tax law changes for 2006.
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Tax Map: an electronic research tool and finding aid.
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Web links to various government agencies, business associations, and IRS organizations.
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“Rate the Product” survey—your opportunity to suggest changes for future editions.
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A site map of the CD to help you navigate the pages of the CD with ease.
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An interactive “Teens in Biz” module that gives practical tips for teens about starting their own business, creating a business plan,
and filing taxes.
An updated version of this CD is available each year in early April. You can get a free copy by calling 1-800-829-3676 or
by visiting
www.irs.gov/smallbiz.
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