Topic 415 – Renting Residential and Vacation Property
If you receive rental income for the use of a dwelling unit, such as a house or an apartment, you may deduct certain expenses. These expenses, which may include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of…[Read more]

Topic 416 – Farming and Fishing Income
If you have income from your farming or fishing business, you may be able to avoid making any estimated tax payments by filing your return and paying your entire tax due on or before March 1 of the year your return is due. This rule generally applies if farming or fishing income was at least two-thirds of…[Read more]

Topic 417 – Earnings for Clergy
A licensed, commissioned or ordained minister is generally the common law employee of the church, denomination, sect, or organization that employs him or her to provide ministerial services. However, there are some exceptions, such as traveling evangelists who are independent contractors (self-employed) under the…[Read more]

Topic 418 – Unemployment Compensation
The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Unemployment compensation includes amounts received under the laws of the United States or of a state, such as:

State unemployment insurance benefits
Benefits paid to you by a state or the District of…[Read more]

Topic 419 – Gambling Income and Losses
The following rules apply to casual gamblers who aren’t in the trade or business of gambling. Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash…[Read more]

Topic 420 – Bartering Income
Bartering is the exchange of goods or services. A barter exchange is an organization whose members contract with each other (or with the barter exchange) to exchange property or services. The term doesn’t include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.…[Read more]

Topic 421 – Scholarships, Fellowship Grants, and Other Grants
A scholarship is generally an amount paid or allowed to a student at an educational institution for the purpose of study. A fellowship grant is generally an amount paid or allowed to an individual for the purpose of study or research. Other types of grants include need-based grants…[Read more]

Topic 423 – Social Security and Equivalent Railroad Retirement Benefits
If the only income you received during the tax year was your social security or equivalent railroad retirement benefits, your benefits may not be taxable and you may not have to file a tax return.

Nontaxable Benefits
If you also received other income, your benefits won’t be…[Read more]

Topic 424 – 401(k) Plans
A 401(k) plan is a qualified deferred compensation plan. If you’re eligible under the plan, you generally can elect to have your employer contribute a portion of your compensation to the plan on a pre-tax basis. Generally, your deferred compensation (commonly referred to as elective contributions) isn’t subject to income…[Read more]

Topic 425 – Passive Activities – Losses and Credits
Generally, losses from passive activities that exceed the income from passive activities are disallowed for the current year. You can carry forward disallowed passive losses to the next taxable year. A similar rule applies to credits from passive activities.

Material and Active P…[Read more]

Topic 427 – Stock Options
If you receive an option to buy stock as payment for your services, you may have income when you receive the option, when you exercise the option, or when you dispose of the option or stock received when you exercise the option. There are two types of stock options:

Options granted under an employee stock purchase plan…[Read more]

Topic 429 – Traders in Securities (Information for Form 1040 Filers)
This topic explains if an individual who buys and sells securities qualifies as a trader in securities for tax purposes and how traders must report the income and expenses resulting from the trading business. The term security is defined in Internal Revenue Code section…[Read more]

Topic 430 – Receipt of Stock in a Demutualization
A mutual insurance company is owned by its policyholders whose ownership interests don’t exist in the form of stock. The insurance policy sets the terms of the policyholder’s ownership. When a mutual insurance company demutualizes and becomes a stock company, an eligible policyholder generally…[Read more]

Topic 431 – Canceled Debt – Is It Taxable or Not?
If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that’s subject to a debt.

If your debt is forgiven or discharged for less than the full amount you owe, the debt i…[Read more]

Topic 432 – Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt)
If you borrow money from a lender to purchase property, the lender may require the loan to be secured by the purchased property. If you transfer the ownership of the secured property to the lender (such as in a foreclosure) or abandon…[Read more]

Topic 451 – Individual Retirement Arrangements (IRAs)
An individual retirement arrangement (IRA) is a tax-favored personal savings arrangement, which allows you to set aside money for retirement. There are several different types of IRAs, including traditional IRAs and Roth IRAs. You can set up an IRA with a bank, insurance company, or other…[Read more]

Topic 452 – Alimony
Tax Treatment of Alimony

Amounts paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payer spouse, and the recipient spouse must include…[Read more]

Topic 453 – Bad Debt Deduction
If someone owes you money that you can’t collect, you may have a bad debt. For a discussion of what constitutes a valid debt, refer to Publication 550, Investment Income and Expenses, and Publication 535, Business Expenses. Generally, to deduct a bad debt, you must have previously included the amount in your income…[Read more]

Topic 455 – Moving Expenses
If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. You can deduct your moving expenses if you meet all three of the following requirements:

Your move closely relates to the…[Read more]

Topic 456 – Student Loan Interest Deduction
Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntarily pre-paid interest payments. You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually…[Read more]